The Deadweight Loss of "The Deadweight Loss of Christmas"

Every year as the weather chills, wreaths are hung, hot cocoa is sipped, and stores start playing the sweet dulcet tones of George Michael and Mariah Carey, our thoughts come to focus on Christmas. And like all good analytical worker bees, inevitably someone asks why must we buy presents for others, instead of everyone just buying whatever it is that they want. It’s a reasonable question! It’s tough to know what your father-in-law wants, and you really can only buy so many scarves for your mother before everyone catches on that you just can’t think of anything to get her.

And as you grumble these thoughts to others, perhaps there will be someone who brings up the fact that economists have studied this phenomenon already. They will tell you about how gift-giving is an imperfect transfer of money into utility, and that an economist has even written a paper about this entitled The Deadweight Loss of Christmas.

“Wow”, you say, “that is quite an interesting and fun fact!” And for most, this is the end of it. But for some few, you will record this knowledge, so that the next time someone brings up the flaws in our little gift-giving ritual, you will talk eruditely about The Deadweight Loss of Christmas. Everyone will tilt their head and say, “Oh?” and nod along as you explain the rigorous economics of the loss we all incur by giving gifts. While you explain the term “deadweight loss”, listeners will subtly shift their estimation of you, as a more learned individual, and you will be pleased.

But alas, while you may have fooled your compatriots, you have actually only perpetuated The Deadweight Loss of “The Deadweight Loss of Christmas”. The deadweight loss caused by people wasting time talking about The Deadweight Loss of Christmas. Unfortunately, this loss has increased every year for the last 20 years, and in an ironic twist, occurs most frequently amongst those who consider themselves the most rational, the most likely to avoid such pitfalls.

Luckily, this loss can easily be avoided. Next time someone tries to bring up this supposed drag on our GDP, just smile and nod and exit the conversation. Instead, turn your mind to your loved ones, their favorite things, and try to decide if your mom would prefer a burnt-orange or umber scarf this year.

Authors’s Note: I seem to recall that an article with this title and idea already existed, but since I could not find it, I’ve decided to write my own version.