The Deadweight Loss Of Chistmas
December 24, 2003 11:49 AM Subscribe
Some economists debate why we can and if we should give gifts for Christmas. Because a gift is likely to be valued less by the recipient than for the giver, Christmas has been considered by some to be a "deadweight loss" equivalent to tearing up banknotes. To get around this, other economists propose that the value of the gift for the recipient comes from the process of finding a rare gift. On the other hand, perhaps this is one case where we should rethink the basic rationality assumption that economic decisions can be explained by models that maximize individual wealth.
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