73% say no to Bah Humbug
How Grinchy are Australian economists really?
The National Economics Panel as part of the ESA-Monash Forum responded to a Christmas-themed statement this month:
Giving specific presents as holiday gifts is inefficient, because recipients could satisfy their preferences much better with cash.
Where an American panel of economists only just disagreed with this statement (53 per cent responded 'no'), a very strong majority of 73 per cent of the Australian panel members disagreed or strongly disagreed with this statement.
One of the panel's economists, Professor Peter Abelson, puts the statement in perspective by comparing it to bringing a present for the host of a party:
"I ask my wife whether we should take a bottle of wine, chocolates or flowers or whether we should maximise our host's utility by presenting her with $20. My wife replies that if I am going to embarrass her by behaving like a silly rational economist she won't come with me to the party."
Professor Harry Bloch strongly disagreed with the statement, remarking that applying efficiency evaluation to gift giving brilliantly demonstrates the limits of the homo economicus conception:
"Through choosing a gift, the giver demonstrates an understanding of the interests and needs of the recipient, thereby indicating regard, perhaps even love, for the recipient. A gift of purchasing power shows a low level of emotional engagement."
These sentiments are echoed by the majority of panel members, who agree that gift giving is about more than a rational exchange of value items.
However, not all panellists agreed with that notion. Adjunct Professor Rodney Maddock, in fact, strongly agreed with the statement that giving presents is inefficient, indicating that a lot of time and money is wasted on inappropriate gifts. He also highlighted the cultural aspect of giving gifts versus money:
"The underlying issue is cultural, with the Chinese for example feeling comfortable with the tradition of giving cash-filled red envelopes. For people who are close to me, and whose tastes I know, I feel comfortable giving gifts, but my nineteen year old niece has to do with a gift card i.e. cash."
All in all, it's fair to say that the Australian panellists aren't Grinches at all. However, it must be noted, as Dr Rana Roy pointed out, the statement really shouldn't even be considered by the panel at all:
As every child knows, "we" do not give presents – Santa does. And it would, I think, be presumptuous of us to advise him. Rather, let us be grateful for what we receive.
Dr Rana Roy
So agree or disagree, it doesn't really matter. All that matters come Christmas morning, is have you been naughty or nice?