I Fought the Law

It sounds like you have a beef with *bad* economics. A real economist would take sentimental value into account since it *is* valuable.

You seem to be saying that the point of the article is that gift-giving is economically stupid. This is certainly a conclusion you could draw from the data. But it's not the conclusion the author draws, because that would be a stupid conclusion.

He is only trying to make two points, both of which are supported by the data.
1. That consumers -- much maligned these days -- are still better at deciding their own preferences then external gift-givers. Perhaps this seems obvious. But to an Economist, quantifying how well people can 'know' their own preferences is an ongoing struggle.
2. Quantifying the degree to which consumers outperform gift-givers. From this, you can draw interesting inferences, such as:
2a. Closer relatives tend to give gifts with greater utility
2b. Distant relatives tend to recognize their inability to pick well, and thus get gift certificates.

Nowhere in the article, besides the headline, is gift-giving critiqued as BAD. Efficiency is not normative, it's descriptive. Distribution is normative. If pure efficiency was any Economist's goal, we'd be soul-less robots, free of love. Pure efficiency is just the yardstick we measure things by. Only by defining it can we come up with interesting metrics like those above.

Regardless of his ultimate conclusions (and I still think that the stupidity of gift giving is implicit in the paragraph I quoted), it's really dumb to "study" gift-giving while ignoring sentimental value. Sentimental value isn't the sine qua non of gift satisfaction, but it's an important factor. It's also a factor that's more difficult to quanitify than whether the subject would have picked out this or that particular toaster for himself.

It's not implicit. That's just your inference.

Sentimental value is important. It's also nearly impossible to measure. So Economists focus on the things that CAN be measured, because otherwise there would be nothing to do. The piece demonstrates pretty well that you can make interesting conclusions despite leaving out large parts of the whole. That's how modeling works -- you can still learn something by assuming a spherical cow, with a uniform distribution of milk. Didn't you learn about gravity by assuming away air resistance?

Economics is really a series of techniques and tools to derive data from the ultra-confusing morass of human affairs. I totally agree that there are many stupid people and Economists who take the models and assume they accurately describe the real world. Obviously they do not. Good economists -- and the Slate article is fully in line -- are far more humble.

Everything I wanted to say, Kevin said better. Except: Matt, is this a "War on Christmas" joke post?

Why are we capitalizing Economist? We don't capitalize Grammarian, and shouldn't they have first dibs?

Well in defense of Matt the "we can measure efficiency better than we can measure other things" argument Kevin is making is rather weak. After all, the utility someone gets from buying themselves a present is also pretty much impossible to measure - unless you assume things like efficient markets and that the price they pay is a good proxy for its value. But by making a similar leap of faith you could measure sentimental value the same way. Compare the amounts people pay when giving cash (presumably without sentimental value) with how much they'd pay for a present to the same person.

I think that some economists have a habit of sneaking normative preference into their supposedly descriptive analysis by simply declaring certain things “measurable” and certain other things “not measurable”. Even if they don’t mean to, an economist’s ideological paradigm can skew their analysis.

Engineers don't design airplanes on the assumption that air resistance doesn't exist. But I've met a lot of law & econ folks who are willing to adopt legal frameworks that they would apply to actual humans with actual problems based on a lot of ass-out-of-u-and-me premises.

It could be that I missed the nuances in Joel's article. But given that the was article posted on a general-interest website under a suggestive title, and claims gift-giving makes 20% of money disappear, I think my interpretation was the one they invited.

I'm sorry, but my main reaction to this whole article and discussion is disgust and a sense that people's time and attention would be more valuably and economically spent elsewhere. Toys for Tots, anyone?

That's kind of the point of a blog, though, isn't it? To waste time that might more profitably be spent elsewhere.

"I Fought The Law: Making Your Time Less Unwasted."

I might use that for Carthage, actually. Or maybe I'll stick with my format and just say "Carthage: And That's No Use."