How to Befuddle an Economist.

Give gifts of real--not monetary--value.

by Nina Winham

Happy December! Sure, it’s dark and dreary, but it’s also a time for some big festivals. And some big gift-giving. That ought to lighten the mood, right?
Apparently not, if you’re an economist. In microeconomic theory, the tradition of gift-giving has been assessed as a “deadweight loss” (and since this is not a diet column, you know that’s not a good thing).

You gotta love those economists—they sure know how to dampen the spirit. Still, I got intrigued by this idea, especially as we soul-search about the commercialization of Christmas.

What they mean by deadweight loss is that, on average, the gifts you give are not valued by the recipient at the same price you paid for them. Economists feel this is inefficient: a good should confer a value equivalent to what an individual would have been willing to pay. (Now, in the endearing way of economists, this theory explicitly ignores the sentimental value of the gift. And isn’t that mostly what gift-giving is all about?)

The better the gift-giver knows the recipient, the less deadweight loss, because the giver is more likely to know what the receiver would value. But there’s also the “white elephant” effect: gifts that are not highly valued but that require the recipient’s time and resources to care for or store.

Even though our poor economists struggle with concepts like sentimental value, I think they have a point. How often have you paused, indecisive, in front of that ceramic tea light holder and that blue wicker thingy, trying to remember if your giftee has anything blue or ever uses candles? Would they buy these things themselves? If not, are you sure your gift is really... er... efficient?

I was pondering this question on the very day I came down with a case of shingles. For the uninitiated, this is the chicken pox virus, dormant inside you since childhood, waiting for a chink in your immune system so it can burst out in a painful, itchy rash and give you a slap upside the head for not taking care of yourself.

Well, I have twin infants who don’t deserve chicken pox yet. So some friends came by, scooped me up, and took me into quarantine at their place. They went out for Epsom salts, ran me a candlelit bath, dug through the closet for the softest old sweat clothes, entertained my (chicken-pox immune) five-year-old, fed us supper, fluffed up the guest bed with fresh sheets, and sent me off to start catching up on my sleep.

What they gave me was the Gift of Nurture. Made up of empathy, support, time, and love, it didn’t cost them much in the wallet. But—economists take note—it was surprisingly high on utility and efficiency, given the price. Because the value to me was priceless. And in the true spirit of gift-giving, I think they were enriched, too. The gift grew in value as it was given, and it will reap dividends for years to come.

The Gift of Nurture, the Gift of Time, the Gift of Friendship—these break the frame of economic analysis. But to give the economists their due, the next time you hover over a gift choice you know has little value beyond the tick on your to-do list, think again.

Here’s to a holiday season with more true wealth and less deadweight loss. Befuddle an economist: give some nurture or some time. And a happy, efficient December to all.

Nina Winham is principal of New Climate Strategies (newclimate.ca ), helping clients build value through a shift to sustainability. She has gained a whole new respect for Epsom salts... and friends.