Wednesday, December 8, 2010

Christmas gifts - deadweight loss?

I was reading this Freakonomics blog post about the economic inefficiencies of Christmas gifts. The author (Stephen J. Dubner) asked the readers to fill out the below form to describe previous holiday gifts:

Cost (estimated)_______
Value (to me)_________

The point is that the author thinks there is a lot of what he calls "deadweight loss" with Christmas gifts. As Dubner describes it "the economic inefficiency that comes about when, for instance, someone buys you a $50 gift that you value at, say $10. That's a deadweight loss of $40."

The comments section in the blog post is funny enough when looking at what people received and how much they valued the gifts. There are a lot of gifts mentioned that cost a certain amount and are valued at $0 by the receiver because they are never used. However, I would like to bring up another example. It would be the reverse of a deadweight loss that I would like to call a "net positive gift." Net positive gifts are those rare gifts that you get that are more valuable than the cost. Those certain gifts that either the receiver didn't know they wanted or has some type of sentimental value in addition to the market value.

I can think of a few gifts that stick out in my head (ex. trip to Cameron Indoor Stadium for my 25th birthday), but for this post I would like to talk about one gift in particular. One gift that had serious deadweight loss potential.

Quick back story to set up the gift. It was the summer after I graduated from Miami University and my four main high school friends had one final summer before two of us had to go off to real world jobs in *distant cities with a promise of more pay, but less vacation. My other two friends were home from college and for maybe the last time we all had plenty of time to hang out and enjoy life as friends.

*From Jackson: Minneapolis is 1037 miles away, while Seattle is 2535 miles away.

In some ways this was the ultimate summer. I could write plenty more about those perfect, relaxed days or the fact that summer was the genesis to two of my friends getting married. However, that is off subject for this post. This post is about a gift I received that summer that ended up being one of those things that I consider an ultimate net positive gift. On one of the final nights in Jackson before I left to make the long drive to Minneapolis my friends presented me with a gift. The gift was a ceramic bunny about 1 foot tall, 1 foot wide and 1 foot deep.

This bunny was sold at the knick-knack store that my friend Marty worked at during the summer. I would visit her at the store often enough and whenever I walked by the bunny I couldn't help but laugh. My thought process was that I wondered who in their right mind would buy such an fat, ugly ceramic bunny. It made no sense to me. The bunny didn't do anything but take up space, and I couldn't imagine somebody thinking that this was the missing piece in their living room.

Of course my friends looked at this and thought that if I was so clear about hating this bunny then it must mean that secretly I really wanted it. They signed the bottom of it and presented it to me as my "going away" gift. I laughed about the gift and took up with me to Minneapolis.

Almost instantly the bunny was a prominent feature in my first apartment in Minneapolis. And surprisingly I loved it. It was so ugly, cumbersome and unnecessary that it fit in perfectly. I know that makes no sense, but for some reason all of the the wrongs made a right. I have sense taken that bunny from apartment to condo to duplex. It was one of those non-negotiable things that needed to be displayed when M and I moved in together, so we found a spot for it on top of the fridge.

Anyway, there isn't much point in this story besides bringing up a positive memory and sharing the hope that maybe the worst Christmas gifts you receive (the ones with a deadweight loss) might over time provide some unforeseen value. Or you can just do what my sister and I do and just pick out each other's Christmas gifts the week before. That is one way of eliminating any deadweight loss when the receiver is in the store (usually a book store) while the giver buys the gift.


Nancy said...

Love this post, Kevin!!! AND thank you for forwarding the link to me, Mary! Think we need an updated picture of the bunny on top of your fridge. :) Loved those summers.

Mary said...

Kevin forgot to mention that the bunny moonlighted in my apartment for a year or so before we moved in together. Such a discreet knick-knack... ;)