DECEMBER 24 2015

Waldfogel, J (1993), "The deadweight loss of Christmas", The American Economic Review. Estimates in this paper indicate that between a tenth and a third of the value of holiday gifts is destroyed by gift-giving. .

Mark Whitehouse, WSJ (2006):  How Christmas Brings Out The Grinch in Economists. Economists aren't suggesting Christmas be abolished. Still, in the latest Wall Street Journal forecasting survey, more than two of three economists opined that if Christmas ceased to exist as a holiday, consumers would either spend more on themselves or spread their gift purchases more evenly across other events such as birthdays. That, in the view of some academics, would put more goods into the hands of people who truly value them and improve social welfare as a result.

George Loewenstein, Cass R. Sunstein, New Republic (2011): The Behavioral Economics of Christmas. Luckily, behavioral economics provides some straightforward lessons for gift-givers. Don’t assume that other people like what you like. Beware of projecting your current mood onto your purchasing decisions. Avoid unrealistic optimism: People probably won’t react as enthusiastically as you expect. Focus on gifts that will get frequent use, rather than immediate applause, only to disappear into holiday-season purgatory. And unless you are dealing with people very close to you, don’t assume that the gift will matter a whole lot. You’ll probably remember it better than they will.

Matthew Yglesias, Slate (2011): Do Not Buy Dad a Tie. The economist’s guide to giving Christmas presents that people actually want. The indisputable fact is that cash is the most economically efficient gift. But cash is, in many cases, socially unacceptable, which means you need to pursue an alternative approach. Here your best bet is to show a taste for risk. The problem with presents is that you’re never going to do a better job of satisfying the gift-recipient’s preferences than she could do herself. But preference sets aren’t fixed. If someone had handed me $10, I never would have spent it buying the Cults album, for the simple reason that I hadn’t heard of the band. When it was given to me, I immediately checked it out and loved it. When you step outside the circle of things you know for sure your gift-getter likes, you risk creating a massive deadweight loss. (You give her a ticket to Las Vegas, without knowing that she hates gambling.) But with the greater risk comes a greater potential reward. You may introduce the recipient to something marvelous she would otherwise have never encountered. Giving stuff rather than cash is a way of saying you know better than the recipient what she really wants. The riskier the present, the more likely it is to generate significant benefit. (So, not a sweater).

The Economist (2014): Less holy, more holly. "WE'RE more popular than Jesus now," John Lennon boasted of The Beatles in 1966. Another shaggy superstar—Father Christmas—can make a similar claim. Based on the number of times "Santa" and "Jesus Christ" have been mentioned in English-language books or journals, Mr Claus surpassed Jesus around the start of 20th century. Secularists seem to have the wind at their back in other respects, too. Book references to "Christmas" have steadily risen over the past 200 years; mentions of "Christianity" itself have fallen, closing the gap between the festivities and the religion that lies behind them. The accoutrements of the modern Christmas, from the Christmas tree to the Advent calendar, have appeared more frequently in books and journals in recent decades (see chart below). Although the calendar has spiritual origins, its real purpose now is to celebrate popular graphics.

Laura Birg, Anna Goeddeke, VOX (2014): Christmas economics: Challenging some common beliefs. Christmas may be not so merry as we hope. Economists have argued that gift giving is an inefficient way to allocate resources, and it is widely suggested that Christmas brings a peak in prices and the number of suicides, or even disrupts the business cycle. This column discusses some conventional wisdom about Christmas and shows that economic research in fact runs counter to some of these common beliefs.

Josh Barro , NYT (2014): An Economist Goes Christmas Shopping.  David Autor of M.I.T. pointed to “revealed preference”: If people give and receive so many gifts, it’s presumably because it makes them happy. Alberto Alesina of Harvard said choosing a gift “is a signal of intensity of search effort,” which is econo-speak for “it’s the thought that counts.

Russell Lynch, Evening Standard (2015): Economic Analysis: The economists' guide to Christmas presents. But if you don’t succumb to the world of the purely rational economic beings who only exist in textbooks, and still want to buy a present instead of giving your loved one a few tenners, what then? Gift vouchers may be the way to go, as they come across as more thoughtful than a cash gift and avoid the stigma of handing over notes, according to US economist Jennifer Offenberg. Offenberg recommends that to play it safe and cut the risk of lost value you should buy gift vouchers for general purpose stores (basically the vouchers as much like cash as possible), while avoiding gift cards to more specialised chains like jewellers.