Cash. In so many ways, it’s the perfect gift. It always
fits, the color is definitely right, and it quickly and easily nestles into the
crisp white envelopes you keep in your desk’s bottom drawer. What’s more,
almost everyone can enjoy using it. But is it really the right gift to give?
Apparently not, according to the IGM
Economic Experts Panel. Fifty-four percent of respondents to this week’s
poll disagreed or strongly disagreed with the notion that gift-giving is
inefficient because recipients could satisfy their preferences much better with
“Balderdash,” said Carl Shapiro of Berkeley. “This narrow
notion of ‘efficiency’—and what life is about—gives economists a bad name.” A
bad name that the Atlantic had some
fun with this week in the sendup, “If
Economists Wrote Christmas Cards.” (The New
York Times and Quartz
also had something to say about the economist-scrooge stereotype.) “Bah,
humbug,” said Christopher Udry of Yale. “Such a claim takes an oversimplified
model too seriously. Gifts can serve many purposes.”
Most of those who disagreed did so on the basis of
gift-giving being about personal relationships. “Instead of proposing to your
wife with a diamond ring, you offer her a gift card of equal value,”
hypothesized Austan Goolsbee of Chicago Booth. “Efficient—if you don’t count
your hospital bills,” he said.
“It’s the thought (identifying the right present) that matters!” said Markus
Brunnermeier of Princeton, who strongly disagreed. “In addition, money lacks
the surprise element,” he said.
Twenty-two percent of respondents expressed uncertainty.
“For many (most?) gifts, ‘efficiency’ is not the point,” said Nancy Stokey of
the University of Chicago. Most of the undecided referred to the emotional side
of gift giving. “Try a cash gift next Valentine’s Day,” quipped Richard Thaler
of Chicago Booth. It seems unlikely that we’ll hear any first hand accounts of
that little price theory test.
Even those who agreed that cash is more efficient pointed
out that gifts should depend on the recipient. “Motivation for the present has
to be non-monetary—but try giving your spouse cash!” said Anil Kashyap of
The poll didn’t ask how much givers should spend, but many
of the economists put forward suggestions for homemade gifts and small,
thoughtful presents. Darrell Duffie of Stanford suggested hand-knit socks. And
research from Chris Hsee indicates that you’re probably spending too much on
Overall, the message is clear. In a personal relationship,
especially one that you want to build or keep strong, cash is just the wrong
choice. If you’re interested in getting rid of the recipient, a crisp $20 bill
ought to do it.