My freshman year of college I walked off the plane for Christmas break wearing a grey sweatshirt bearing the name of my university. A few days later, on Christmas morning, I opened up a box from my parents containing the exact same sweatshirt. On the day after Christmas this year I remarked to my mother that if Grandma ever gave me anything besides a sweatshirt that I would probably drop dead of a heart attack. I can’t remember the last time she gave me something else.
Don’t get me wrong – I’m very appreciative of the gift, and as I listen to the wind howl outside as I write this I am keenly aware of those who would love an extra sweatshirt right now. However, I don’t wear sweatshirts – or any shirt with long sleeves – all that often, and certainly not if I can help it.
I still have that same grey sweatshirt I bought 10 years ago. It’s quite stained now, and the sleeves are showing some wear, but it’s still really the only sweatshirt I wear. It suits my purposes just fine, and truth be told I still like it quite a bit.
It thus resonated with me when I read of Joel Waldfogel’s new book, Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays. Waldfogel, of the Wharton School, talked about the deadweight loss of Christmas gifts. Say the sweatshirt I got cost my grandmother $50. If she had just given me $50 I would have gone out and spent it on something I would have enjoyed quite a bit more. Chances are I would have gotten a full $50 worth of enjoyment out of the item I chose myself, but I won’t get it from a sweatshirt that will sit in my closet.
Still, something just didn’t seem quite right with his analysis. The old saying goes that it’s the thought that counts, and I think there’s quite a bit to that, so I was pleased to read In Defense of Holdiday Gift-Giving this morning.
To make any sense of holiday gift-giving, we must move away from a thinking of the items as mere transfers of wealth or property. That isn’t their point. Gifts are better understood with the tools of signaling theory: the branch of economics, pioneered by the Nobel laureate A. Michael Spence, that explains the use of costly actions to provide information. …
Mr. Waldfogel’s negative view of holiday gift-giving is essentially a Yule-tide version of the Spence signaling model. We all want to convince others that we like or love them. Presents are a signal of affection, and if we didn’t give them, we are thought to either be uncaring or ill-mannered. As a result, society engages in a lot of wasteful holiday spending.
Signaling has many virtues, and it is hard to think of anything more valuable than showing affection for others. In the schooling context, signals allow the matching of people to jobs. In the context of gift-giving, providing presents increases the welfare of others by giving them the sense that they are loved.
I appreciate the gift my grandparents got me not because I really wanted a sweatshirt, but because of all the thousands of styles of sweatshirts out there, my grandmother took the time to pick out one that she thought I would like. It was the sentiment behind the gift that matters most to me. As my great-mother was known to say, ’tis the giver, not the gift, that counts. For without the giver there wouldn’t be a gift at all.
As it so happens, I actually like the sweatshirt I got this year, but that isn’t always the case. As Economix had to say this morning,
Gifts from uncles and grandparents were valued less than gifts from parents, which was compatible with the view that knowledge of tastes declined with social distance.
Glasaer is speaking of economic value here, not sentimental value, but it matches up to my experience. The one time my parents bought me a sweatshirt as an adult, it was one that I liked so much that I purchased it for myself. I would have been thrilled if my grandparents bought me one with my alma mater’s name on it, but I guess that’s really a lot of social distance.