The Dismal Science and the Holidays

by robekulick

Recently my friend Anna suggested that I do a blog post about what to give that special economist in your life for the holidays. My first reaction was an emphatic no.  I have a hard enough time figuring out what to get Jess (for the small set of people who read this and don’t know that) for Hanukkah, so the idea of selecting a number of gift ideas was just really daunting. Then I started thinking that I could do a smart-ass post about gifts for economist and make it about how the only gift that really makes any economic sense is money – the idea being that an individual knows their tastes and preferences better than anyone else so if you try to guess what someone else wants at best you’ll find a gift that provides as much utility as they would have gotten anyway but more likely you’ll just end up getting a gift that offers less utility. This isn’t the whole story on the economics of gift-giving, but it tends to be the economic argument that many economists like to make. While I was thinking about this I also thought back on some thing I had read in the about famous  economists and the holidays, and something interesting jumped out at me – it seems that economists love to hate the holidays.

Exhibit A: Bob Hall

Bob Hall is one of the most famous economists out there. He was recently President of the American Economic Association and both John Taylor and Paul Krugman invoked his work in arguments this week. This Wall Street Journal article from a few years back had a funny anecdote about Hall:

“Stanford University economist Robert Hall, incoming president of the American Economic Association, values his time so highly that his wife, economist Susan Woodward, occasionally puts her foot down. ‘Bob doesn’t see why we can’t just hire people to trim the Christmas tree,” she says. “I tell him that’s not what it’s supposed to be about.'”

Exhibit B: Thomas Schelling

Thomas Schelling is a Nobel Laureate and former Professor at the University of Maryland! In his book Micromotive/Macrobehavior (terrible title, but really interesting book) he explores how in non-market situations individually rational behavior often leads to outcomes that are very non-optimal in aggregate. Now if you’ve read this far you’re probably thinking of quitting at this point since that doesn’t sound very fun, but here’s the funny part. To illustrate his point he uses the example of Christmas Cards:

“Sensible people who might readily agree to stop bothering each other with Christmas cards find it embarrassing, or not quite worth the trouble, to reach such agreement.”

Exhibit C: Jared Waldfogel

Jared Waldfogel is an economist who actually wrote a book entitled “Scroogenomics: Why You Shouldn’t Buy Gifts for the Holidays.”  He estimates that gifts other people buy us are worth 20% less than those we buy ourselves. I’m not sure exactly how he estimates this econometrically, since I don’t have the book, so I’m not necessarily endorsing the numerical finding. It actually seems sort of specious to me. However, there seems to be some really anti-holiday spirit among prominent economists and I have to admit all of the arguments resonate with me.

So to wrap things up here, I don’t think there’s much point to making a present list for economists because clearly Santa isn’t going to be giving presents out at the AEA meeting this year (for reasons even beyond the fact that there are so many Jewish-Hindu-Chinese economists out there).