The bulk of you have spent the past few weeks vegetating at the parents’ place, enjoying late December’s reprieve from busywork and dead-end employment while wedging in a few holidays as well. Kwanzaa, Festivus and the like are all well and good, but this first Gaucho Economicus column of 2006 will focus on the favorite holiday of every jaded agnostic, pro forma suburbanite and apostate Jew: Christmas.
Setting aside joy, peace and goodwill toward men for a moment, we’ll turn our attention toward presents. Who doesn’t delight in tearing open shiny, meticulously-taped paper in order to reveal the items they’ve spent the past half-month shaking, staring at and speculating about? Such Christmas mornings are the stuff of misty-eyed childhood nostalgia. However, we’ve all got to grow up sooner or later, and when we have, economics beckons us to cynically re-examine our cherished memories.
Every holiday season, similar studies tend to emerge. Often performed by snarky graduate students or unproductive, straw-grasping researchers, they seek to determine whether or not the widespread gift-giving of December 25 is a good value. What’s surprising to many is that, when the sum of what the givers paid for an individual’s haul is compared to the amount that the recipient would have himself paid for said haul, the latter consistently lags ten to 20 percent behind the former. This causes what economists call a “deadweight loss,” or destruction of wealth. At least one gift dollar for every ten spent is wasted, a fact that, when extrapolated to society as a whole, is disturbing.
Simply put, the average Christmas participant doesn’t value the items he receives enough to justify their purchase. On reflection, this might ring true. If only your job wasn’t dead-end, you’d have been willing to pay full price for the Xbox 360, though perhaps not the Flowbee. It may rarely be the case that you would have paid more for something than the giver did – the Andy Warhol print your uncle found in a dumpster, for instance – but on average, the dollars spent on you would have been more efficiently allocated by your own hands.
I’m lucky enough to have only immediate family, close friends and a girlfriend in my network of gift exchange, all of whom know me well. As a result, their combined budget for my Christmas stuff was likely used as efficiently as I myself included could have done. Conversely, for some of the less fortunate among us, vast arrays of distant relatives and questionable hangers-on complicate the situation.
Detailed observations have verified an applicable common-sense notion about what lands under the Christmas tree. While proximate pals and relations have a good handle on one’s tastes and thus get a fairly decent value for their Christmas dollar, those less close would do better to simply send a sheaf of bills. As the family tree branches out, the desperate, bizarre and/or breathtakingly tacky items flood in. You may have noticed this phenomenon occurring in grandparents, especially those of foreign origin. At the heart of the matter is an issue that recurs on the world stage: Money spent on A by B isn’t as efficient as money spent on A by A. While it may take decades to disabuse world governments of the notion that they know how to best spend their citizens’ cash, we can start chipping away at the misconception on an individual level right now.
Is it time to abandon gift-giving in favor of, say, Pagan debauchery? No, and not just because pyre rituals lead to singed eyebrows. If you do your homework, it’s possible to bridge the gift valuation gap. Think, for example, of the kid who unwraps a book about economics one Christmas. Sure, he’d have used the money on a pair of those miniature skateboards you ride with your fingers, but only because he didn’t realize the fun of the subject. When he finally decides to crack the tome, a whole new world will stretch out before him; who wouldn’t value that kind of gift highly?
Daily Nexus columnist Colin Marshall is the gift that keeps on giving – to an efficient extent, of course.