Nobody has done more to damage relations between the joyous commercial festival that is Christmas and the economics profession than Joel Waldfogel. Long-term readers of this column will be well aware of Professor Waldfogel’s research paper, “The Deadweight Loss of Christmas”. Ever since it was published in 1993 it has been taken out by economic journalists and displayed like last year’s decorations. Waldfogel – a witty writer himself – has evidently decided that if everyone is going to discuss the idea, he may as well get in on the act, so has published Scroogenomics, a book that – dare I say it – looks like it would make a terrific stocking-filler.
Waldfogel’s central insight is that if I give you a £50 shirt for Christmas, and you hate the shirt, that is £50 wasted. This is the “deadweight loss” of Christmas, and Waldfogel’s original research suggested that the typical £50 gift is worth no more than £35-£43 to the lucky recipient, a deadweight loss of about 15 to 30 per cent.
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