The Deadweight Loss of Christmas

Not very Christmas-y, I know, but the colours are merry.
Allan Gardens greenhouse, December 2018.

I first encountered economists in undergrad history courses; they explained everything from the perspective of the economy. So, the Industrial Revolution? The economy. The fall of Rome? The economy. 

I caught the gist early on and stopped paying attention.

Economists showed up again at law school with a twisted view of the world, which is to say, they professed that humans were rational decision makers, apparently not noting the irony of all the laws in place to keep these rational beings in line.

Later on in my career, any stab I took at making public policy always had economists lurking in the background, or, worse, standing in the foreground, telling me what to do.

All of these economists professed that they could predict human behaviour. And when humans didn't act as predicted, well, it was the humans who were in error, not the economists.

For example, Christmas. 

Joel Waldfogel is an economist who argues in his book Scroogenomics that purchasing gifts for other people is a "terrible way to allocate resources." He estimates worldwide that approximately $25 billion a year is misallocated in holiday spending. 

Everyone reading this knows what he's talking about. The candle you got last year that you put in the office Secret Santa this year, the bottle of port (ick) you got from your boss seven years ago that you haven't touched, the gift you spent ten hours shopping for, so your friend could look genuinely disappointed when they opened it. 

We don't need economists to tell us we're throwing good money out the window. Every year we do it anyway. 

Because, it wouldn't be Christmas, apparently, without a deadweight loss, or without economists telling us we're acting all wrong.

With all this in mind, here is my holiday wish for you: 

May you have an economically optimal Christmas so that all your gifts, both the ones you give and the ones you get, achieve maximum utility.

Thanks for reading!

Happy Holidays!!

Karen

Winter's just started,
squirrel's already done.