One Economist Who Won't Play Scrooge

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Are all these gifts helping or hurting the economy?

The Economix blog has a piece today from Edward Glaeser, an economics professor at Harvard, who very much disagrees with Joel Waldfogel's theory about the deadweight loss of Christmas. Here's a taste:

We could certainly celebrate the holidays by cutting checks for our parents and children. Such transfers would entail none of the deadweight loss that Mr. Waldfogel perceives. The recipients could then spend the money on exactly the things that their hearts desire. But by choosing actual gifts, we are trying to show that we care enough about the recipient to do some extra work, and that we know them enough to choose gifts that are not totally off base. Inevitably, I'm an imperfect buyer, but I like to think that the recipients of my gifts value the knowledge that I care, more than they feel the welfare loss from my mistakes.

So as much as I admire Joel Waldfogel, I'm not joining his war against holiday gift-giving. I think humanity engages in too few costly displays of affection, not too many. I support the far more prosaic cause of making gifts easier to return or exchange. The ability to exchange provides an easy way of limiting the deadweight loss from giving, while still ensuring that the recipients have seen givers' best stabs at matching their tastes.

BONUS: Listen to our interview with Waldfogel earlier this year.