Friday, December 24, 2010

Avoiding Xmas Deadweight Loss, Part II

Christmas two years ago I pointed that the inefficiency of gift giving is significant, but could be avoided. However, what I didn't mention is just how significant it was. The Economist suggests the number may be close to 10% of all money spent on Christmas gifts. That's $4 billion in wealth gone. Although giving can be valuable on its own, like a good short cut on a long road trip, increases in efficiency increases happiness. Sadly, because of the social norms market, giving cash, and to a lesser extent gift cards, aren't the short cut. That's why I was so amused by a recent story from Planet Money was so convincing. I won't do the story justice by describing it, so you should take the time to listen and come to the same conclusion that I did; that trading presents increases well-being. That's why my siblings have decided to do something a little different this year:
  1. Instead of exerting the huge effort needed to find all of my siblings (I have six not counting their spouses), we've drawn names. Each person is responsible for one other person.
  2. We each also bring a smaller gift and play the Dirty Dice Christmas Gift Grab Game.
We actually did this early because of schedules and I must admit, it was fun and affordable.

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