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Mark Kingwell is a professor of philosophy at the University of Toronto whose latest book is On Risk.
I imagine few people outside the world of social science are acquainted with the work of Joel Waldfogel, a distinguished figure in the field. But in 1993, Prof. Waldfogel published an article in the American Economic Review called The Deadweight Loss of Christmas that unexpectedly gained him some wide celebrity.
Its main thesis was this: Christmas gift-giving produces massive annual economic waste, at that time estimated between $4-billion and $13-billion in the United States alone. Over the years, this Grinch-y claim has caught the attention of everyone from NPR to The New York Times, which noted that Waldfogel’s treatise is “the sort of academic paper that makes ordinary people think economists are kind of crazy.” For many, the argument likewise validated Thomas Carlyle’s characterization of economics as “the dismal science.”
For those not schooled in that sad science, a deadweight loss is a social cost generated by mismatches between supply and demand, or by other market inefficiencies such as monopoly pricing or bad subsidies. The Christmas-related deadweight accrues from well-meant misalignments in consumer value. If the money you are willing to spend on a gift is more than I would be willing to spend on the same item, that’s a dead weight. The spending might be a macro good to the overall GNP economy, but it’s micro bad to value.
At the margins, such a gap is simply just tolerable inefficiency. Let’s say you pay $50 to get me a coat that I would only buy at $40. We’re both pretty happy with this exchange. At the extreme, though, the loss can be total. Suppose I don’t like or even want your gift at all, however expensive. I am now forced to regift it to someone else or just toss it into the back of the closet, with all value lost. Gift receipts (itself a sad term) offer a curb against such losses, so that what was given can be exchanged if the retailer is willing. But the practical limits on that redemptive opportunity include both laziness and unwillingness to offend, especially when in-person retail is currently so hard. And let’s not even get started on the surplus losses of gift cards, whose value often goes unused or has to be supplemented by the giftee.
My own favourite example of a total deadweight-loss scenario involves a Christmas fruitcake, that notoriously controversial dessert. One of these heavy gateaux was given by my family to some local neighbours in rural New Hampshire. The recipients didn’t care for the proffered gift. In fact, they returned it quite literally by hurling it from a moving car, a sort of baked grenade or landmine, onto our front lawn. I suppose that counts as a market correction.
Whenever it comes to gifts, there are always going to be risks and rewards – mostly because we don’t always agree on what a gift is. Let’s say I buy you something you didn’t even know you wanted, and wouldn’t have bought for yourself if you did. And, miraculously, you love it. This redeems a potential loss, because it represents both a personal and a market-based win-win over simple cash exchange. If I know you well, and am thoughtful, I can at least sometimes guess accurately the cut-line between what I am able to spend what you are bound to value. That’s what friends and family are for. (For the record, aunts, uncles and grandparents are not very good at this. Also, someone please send that illustrated edition of Izaak Walton’s The Compleat Angler.)
Introduce any expectation of reciprocal return on gifts, however, and new losses are in store. Anyone who has endured a long Christmas-morning unwrapping session knows that reciprocity is often dashed. The thoughtful gift-giver starts looking like a schmo, surrounded by duds after dispensing gems. It also seems, to purists, contrary to gift-giving in the first place – this isn’t a contract!
Or is it? Some families do an end-around with precise wish lists or by recasting gift-giving as, essentially, proxy purchasing or redistribution of wealth, sending links to ensure good choices. One of my students recently told me that he asked his mother to give him German phenomenologist Edmund Husserl’s two-volume Logical Investigations (list price between $120 in paperback and $360 in hardcover) for Christmas. Everyone should get this tome: Yule love it! Ha ha.
This kind of transactional scenario will warm the cold hearts of economists, I suppose, but its efficiency strikes many people as too close to being a version of the Shopping Channel or a visit to some family-shared ATM. Why not just hand over cash? Is it really a gift when someone else makes you order it?
So another wrinkle is the scheme known variously as Yankee Swap, White Elephant or Dirty Santa. This parlour game offers mostly inconsequential wrapped objects, moved around a group of people by way of steals, preferences and tactical unwrapping. It’s like playing cards, maybe Hearts, only the tokens are small items instead of suits. The presents must be of low value, otherwise players may get too invested; but they must also be minimally worth having, otherwise it is boring. None, per the initial rules, can ever be personal.
The bottom line in all this tortuous manoeuvring is that gifts, by their very nature, confound traditional market expectations. They defy the economic rules. Consider the general idea of being “gifted.” Athletic ability, chess genius, innovative intelligence – these are things we regard as bestowals, as in the gifted class at school. Such qualities can be overvalued, such that gifted becomes synonymous with entitled; but we should also remember that any gift is also a burden. What if, having been labelled gifted, I fail to make the pros, or drop out of university, or lose that championship match?
And yet, despite all these caveats, the very idea of a gift retains a strong hold on our imaginations. A true gift is proffered freely and without any expectation of return. It defies transaction and bargain. That is a heavenly prospect. The idea of true giving is free, open and unencumbered. It is hospitality in its most material form, the welcome that transcends all contracts.
Dr. Seuss’s Grinch is, after all, a prisoner of mistaken envy. The Whos in Whoville value connection and community, not material objects or even their delicious roast beast. That realization is what makes the Grinch’s shrivelled (economist’s?) heart grow three sizes when he hears them singing even after all the presents have been purloined. Even those children out there (naughty or nice) who just want their two front teeth for Christmas are still suspended in tangled webs of desire and exchange. The teeth are coming, kids, just be patient.
Lewis Hyde, the great American essayist, suggested that art had the creative capacity to keep on giving in this way. Recalling Oscar Wilde’s definition of a cynic, he argued that an artwork may have a price, but its value has no number. The philosopher Jacques Derrida likewise noted the paradoxical impossibility of the gift: offered with total openness and yet meant to be cherished, it creates a strange double bind on the recipient. How do I value something that is presupposed to be offered without return?
Mr. Derrida’s deconstruction is maybe a bit too high-flown for people anxiously contemplating a Christmas or Hanukkah shopping list, or dealing with “requests” for gifts (which are therefore not gifts). You can overthink giving, just like you can overthink most things. I think the greatest gift we can all give each other, maybe especially in this benighted year, is to lower expectations and heighten patience. Life is hard, and it’s hard for everyone. A gift offered in the spirit of true openness, maybe even to a stranger, is one of the best things we can do right now – or ever.
I think sometimes of the closing sermon delivered by David Niven, playing the eponymous clergyman in the 1947 film The Bishop’s Wife. Drawn into sticky transactional negotiations with potential donors over his ambitions for a new cathedral, he is recalled to his better self by the intervention of angel Cary Grant, known as Dudley. This divine messenger flirts with spouse Loretta Young, charms everyone, skates like an Olympian, decorates Christmas trees with a wave of the hand and drinks lunchtime stinger cocktails with censorious dowagers in a local lounge.
The bishop reads the lines of his sermon with surprise, because he had composed something quite different before the angelic intervention. “You give me a book, I give you a tie,” he says. “Aunt Martha has always wanted an orange squeezer and Uncle Henry can do with a new pipe.” The only unfilled stocking is that of the child whose birthday it is. I’m not a Christian myself, and I would change the masculine pronoun here, but the final message is powerful nonetheless: “Let each put in his share, loving kindness, warm hearts, and a stretched-out hand of tolerance – all the shining gifts that make peace on earth.”
Very nice, indeed. And don’t forget that Festivus for the Rest of Us falls on December 23rd. There are no gifts, just the airing of grievances and feats of strength. There is the undecorated aluminum pole. We should probably, in all rationality, just stop giving each other gifts under heavily conventional conditions such as Christmas, birthdays or anniversaries. We likely won’t. But instead, how about we randomly bestow blessings on people for no reason at all, just because? No deadweight loss there, in the happiness economy.
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