Monday, March 13, 2017

Gift Giver Surplus

A while back I wrote about consumer surplus.  This is the money a consumer would pay for something, but didn't have to because it was being sold for less than that.  I spent weeks mulling it over at the time.  It really did have an impact on me.  During that time I caught a clip from Adam Ruins Everything.  That's a show that tries to illustrate the hidden truth of things you may have a misconception about.  I love content that does this well; Freakonomics for example.

Adam Ruins Everything does bring up some great points and facts you may not be aware of.  It is worth watching.  In my opinion, they have some twisted takes on reality though, and sometimes leave out important facts that don't fit the narrative they're telling.  Not the best example, but the reason I brought them up, is their take on gift giving.

The argument they put forth is basically this:
Premise #1, you know what things are worth to you.
Premise #2, you don't know how much things are worth to people who are not you.
Conclusion, gift giving is like throwing money away because of the consumer deficit you're creating.

I think this is wrong on every level.  For starters, premises 1 and 2 are flawed.  There are certainly times where we are wrong about what we want, and times someone we know has better ideas.  An example Walter once gave was clogs.  He never considered buying himself a pair, but when his wife did, he soon realized they were often a great choice of footwear for him.  Assuming all purchases beneficial to your life must come from you is very narrow minded.

But my biggest complaint is the form of the argument.  It assumes the only value in a gift is in owning that item.  To calculate the total value of a gift, you would need to add what it's worth for the receiver to own it, the joy the giver received to give it, and the joy the receiver received to receive it.  Okay, that sentence looks crazy, but it does make sense.

As I stated in my last post on consumer surplus, experiences usually have more total value than items.  This is because most objects are only temporary or temporarily useful, when the memory of events can last a lifetime.  These people completely ignored two of the three aspects of gift giving, and they were the important two.

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