It sounds broken… In 2018, the average American
will spend $600 on holiday gifts, and total spending in the US will
top $700 billion. And more than $100 billion of that spending will be
totally wasted, or as economists like to say, those gifts will be a deadweight loss. How can you avoid such a loss this year? Economic theory provides a simple solution: Give cash! Yale economist Joel Waldfogel — conducting
serious science — wrote a famous article that estimated that between one-tenth and
one-third of holiday gift-giving is mismatched compared to a cash gift. Waldfogel finds further
support from economist Steven Landsburg, who says he’s not sure why people give each other
store-bought gifts like clothing instead of cash, because cash is never the wrong
size or color. So, clearly cash is always the most efficient gift. But if
cash seems too impersonal, consider the next most
economically efficient gift — a gift card. Like cash, it’s never the wrong size or color. Do you think cash is an acceptable
holiday gift? Let us know in our poll. Also, let us know what other topic you’d
like our scholars to cover in 60 seconds and be sure to LIKE and subscribe
for more research and videos from AEI.

Christmas and the timeless gift of cash | IN 60 SECONDS
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18 thoughts on “Christmas and the timeless gift of cash | IN 60 SECONDS

  • December 25, 2018 at 1:14 pm
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    If you're not giving me something you're confident I will enjoy at least as much as you are paying to give it to me, please either ask me for gift advice or give me the cash you're paying instead. Yes, if we both exchange a hundred dollars it's like nothing happened. But isn't that better than losing a hundred dollars on a gift that wasn't much appreciated? At least there's a nice card. The idea is to encourage the recipient to buy what they want with the money. It would be fair to give money with stipulations demanding that they actually buy something they want during the season instead of just adding it to their savings. I enjoy coming up with gifts for people, but I'm good at anticipating what they want. Most people aren't. Who wants another article of clothing they would never have bought for themselves and are reluctant to wear? The value could have been spent on something valuable to the recipient. There are some people who just demand a total surprise gift, and you'll just have to roll the dice with them. They don't want cash or to be involved in the decision. You'll have to do your best. But why not communicate and find out if cash is OK or preferred? Or perhaps the recipient is making a large purchase for themselves that you can contribute to? Then it's not like you gave them cash, it's more like you helped them buy that big thing they've been saving up for.

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  • December 25, 2018 at 1:24 pm
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    lol
    gift card?
    Credit that can only be redeemed in one shop and has an expiry date? What a great gift.
    I do agree with the rest of the video though.

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  • December 25, 2018 at 1:49 pm
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    A well thought out gift may work when you know the person intimately but the receipt should be enclosed.

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  • December 25, 2018 at 2:03 pm
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    also, you can't get too many cash presents, like you can get 2 of the same present, making one of them useless for you.

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  • December 25, 2018 at 2:52 pm
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    We give each other gold bars in the family.

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  • December 25, 2018 at 4:17 pm
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    Merry Christmas and Happy Holidays to all!! Why not give Cash every situation is different:)

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  • December 25, 2018 at 5:44 pm
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    charity is the drowning of justice in the shithole of mercy – pestalozzi

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  • December 25, 2018 at 7:21 pm
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    If I give cash or a gift card, I will need to give more than a really cheap gift that has the price tag removed. If someone gives me a gift that I don't want, as long as it's not extra terrible like socks I will regift it and be a little closer to having next year's Christmas shopping done. So even a gift I don't want I will still appreciate.

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  • December 25, 2018 at 7:28 pm
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    Gift card sounds like the worst of both worlds: it's still impersonal, but the person might not use that in the thing the cash pays

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  • December 25, 2018 at 11:16 pm
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    In many Asian cultures, red envelops (containing cash) is often gifted out instead. No deadweight loss there. Western gift exchanges tend to be both ways, whereas red envelops are usually gifted in one way exchanges (e.g. given to children or being given to newly weds). It doesn't really make much sense if two people gave each other the exact amount of cash. The bigger issue is that culturally, westerners derive utility from giving out gifts. This utility can come in the form of feeling altruistic or elevating one's social status. For altruistic people, giving cash makes the most sense. For people who seek social status, then giving out cash is seem as lazy or impersonal by others.

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  • December 26, 2018 at 2:55 am
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    How is giving cash whatsoever? If you're giving gifts, it's usually either going to be for kids, where you want to have control over the things they have, or it's mutual, where both people just get cash and nothing is gained.

    People don't exchange gifts to exchange money. They exchange gifts to exchange gifts.

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  • December 26, 2018 at 6:57 am
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    here is the problem with giving cash… say both a husband and a wife give cash to each other and it is the same amount… then skip the giving cash and just go out and buy yourself something in the first place!

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  • December 26, 2018 at 9:47 am
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    Or give someone your time. Experiences. We don't all have money and we don't need to buy most things.

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  • December 28, 2018 at 2:33 am
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    Or, just set spending limits and then give small personal gifts instead.

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  • January 3, 2019 at 11:57 pm
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    At like 10 seconds in, how does America as a whole spend over $700 billion, but each individual spends an average of only $600?

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  • January 12, 2019 at 11:43 pm
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    Thank you for voicing this.

    It's reaaaaally hard to hammer through girlfriends and family.

    On top of the deadweight loss, the time spent on trying to figure out what's the best gift for your giftee is an additional deadweight loss, as they probably know their preference better, and will have a faaaar easier time deciding.

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  • January 14, 2019 at 10:06 pm
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    If I require a gift, heavily implying it to the person that is going to give it, they might be paying more than what they would otherwise give me in cash. It's also more exciting to see whether they know you or think about you enough or want to give you the premium version of it. However, the pros and cons of the cash option are not to be disregarded.

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  • February 18, 2019 at 2:19 am
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    I did retail for Macy's this past holiday season and I could not agree more with this video.

    There were SO many returns! Just buy a gift card.

    Reply

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