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Turns out I've had this around for awhile:
Dec. 4th, 2005 07:09 pmSo, Scrooge was right after all
December 24, 2003
Gift giving is irrational - unless, perhaps, you are hedging your bets, says Ross Gittins.
It's a little-known fact that the first economic rationalist was Ebenezer Scrooge. That's because economists simply can't understand why people would do something as stupid as giving presents at Christmas.
Conventional economics teaches that gift giving is irrational. The satisfaction or "utility" a person derives from consumption is determined by their personal preferences. But no one understands your preferences as well as you do.
So when I give up $50 worth of utility to buy a present for you, the chances are high that you'll value it at less than $50. If so, there's been a mutual loss of utility. The transaction has been inefficient and "welfare reducing", thus making it irrational. As an economist would put it, "unless a gift that costs the giver p dollars exactly matches the way in which the recipient would have spent the p dollars, the gift is suboptimal". ( Read more... )
huh. And I just had a conversation with the bf about the possibility of making stained glass for my niece considering the fact that: I have to buy a piece of glass in Madison; my car is acting funky and I'm not trusting it to start once I'm in Madison; I'm not sure of my upcoming schedule; and it's been quite cold, not the best situation for doing stained glass in the unheated garage.
December 24, 2003
Gift giving is irrational - unless, perhaps, you are hedging your bets, says Ross Gittins.
It's a little-known fact that the first economic rationalist was Ebenezer Scrooge. That's because economists simply can't understand why people would do something as stupid as giving presents at Christmas.
Conventional economics teaches that gift giving is irrational. The satisfaction or "utility" a person derives from consumption is determined by their personal preferences. But no one understands your preferences as well as you do.
So when I give up $50 worth of utility to buy a present for you, the chances are high that you'll value it at less than $50. If so, there's been a mutual loss of utility. The transaction has been inefficient and "welfare reducing", thus making it irrational. As an economist would put it, "unless a gift that costs the giver p dollars exactly matches the way in which the recipient would have spent the p dollars, the gift is suboptimal". ( Read more... )
huh. And I just had a conversation with the bf about the possibility of making stained glass for my niece considering the fact that: I have to buy a piece of glass in Madison; my car is acting funky and I'm not trusting it to start once I'm in Madison; I'm not sure of my upcoming schedule; and it's been quite cold, not the best situation for doing stained glass in the unheated garage.
