Joel Waldfogel: Scroogenomics

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High-income people spend a lot more than do average people on education and retirement savings. If we were trying to get clues about good gifts from what the rich do, then we should give people education and future consumption.

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Christmas giving is something that people need to get out of the way, not something people wish they could do more of, if only they were richer. Christmas gift giving, pardon the metaphor, is a cross that we must bear.

Buyers normally choose things they correctly expect to enjoy using. But not at Christmas. As a result, the massive holiday spending has the potential to do a terrible job matching products with users.

If the giver`s goal is to change behavior, it`s not enough to give the healthy thing - bran, let`s say - that you want them to eat. You also must give more bran than the recipient currently eats, that is, when he`s getting by without a grant. Any amount of bran he`s already eating - up to the amount of the grant - becomes cash, since he can substitute the gift bran for purchased bran, freeing up cash for anything else he might buy.

If Christmas were a government program, the Citizens Against Government Waste would classify the entire $66 billion in annual expenditure as "waste".

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