Christmas and economists go together like — well, like drinking and walking. Joel Waldfogel, the economist who is famous for highlighting the deadweight loss of gift-giving, has a new book out called Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays. A few years ago, we argued that gift cards in particular are a bad idea. Alex Tabarrok, writing at Marginal Revolution about what he wanted for Christmas, put it this way: “The economist in me says the best gift is cash. The rest of me rebels. … [W]e want the gift giver to buy something for us that we would not have bought for ourselves. Or more precisely, one of our selves wants this — the self that is usually restrained, squashed, and limited, the wild self, the passionate self, the romantic self.”
So today’s question is: what’s an optimal gift for the economist on your shopping list?
If you qualify for the following question, you might want to answer it as well: what’s the best (or worst) gift you’ve ever been given by an economist?
and 
. You can also watch it on 
Something the economist wants, but does not value higher than or equal to the cost to acquire it. If you choose to incur that cost, then you have made a gift to him/her. However, that economist may be prone to selling that item since its cash value its higher than its usefulness to him/her.
Example: I have a Harmony remote and a PS3. The Harmony adapter to make the remote work with the PS3 is $60, which is 80% of the cost of the remote. To me, that’s too much. If my brother were to give it to me as a gift, I’d be happy.
For the budding economists like myself you can always give text books. Something we would have been required to buy on our own and which at the end of the semester have a resell value making us better even better off.
If you can find something they want but don’t know exists, then that would be efficient.
Your gift is essentially the search cost of finding this new thing.
Of course, you have to be sure they’d want it if they knew about it…
A kitty cat
optimal gift for the economist: hot air
the worst gift you’ve ever been given by an economist: George W. Bush
A tin of caviar without a tin opener. Then we can spend the rest of the day watching him or her assume that the tin is open and learn that that doesn’t help.
Nothing. The invisible hand will provide. Anything else is socialism.
I think saying that gifts only create dead weight loss is a sadly narrow minded view of gift giving. Even without appealing to behavioral economics, Colin Camerer has a nice paper in the ASR about gift giving as a signaling game, where by choosing the gift they wanted, you signal how well you know that person. Which makes perfect sense to me, and is a valuable economic institution.