Tuesday, December 17, 2013 1:03pm

Bah, Humbug

Giving specific presents as holiday gifts is inefficient, because recipients could satisfy their preferences much better with cash.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 1
Bio/Vote History
         
Alesina Alberto Alesina Harvard Strongly Disagree 1
the choice of the gift giver is a signal of intensity of search effiort
Bio/Vote History
         
Altonji Joseph Altonji Yale Disagree 8
Cash is more efficient in a narrow sense, but holiday gift exchanges are about interpersonal relationships.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 5
Clearly true if one ignores the pleasure one may get in choosing or receiving specific gifts. Only in some cases are these factors minimal.
Bio/Vote History
         
Autor David Autor MIT Disagree 10
Are you serious? Presents serve multiple interpersonal purposes. Revealed preference indicates that income transfer is not the primary one.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Uncertain 7
Depends on goal: may have goal (like create emotional connection through item - as if economists had emotions!) not achievable with cash.
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Disagree 7
Giving a present gives one an occssion to think about the recipient. The effort one puts into buying can be an important signal as well.
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Disagree 5
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Strongly Disagree 9
it's the thought (identifying the right present) that matters! In addition money lacks the surprise element.
Bio/Vote History
         
Chetty Raj Chetty Harvard Agree 7
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 10
Of course does not consider receiver's joy of giving, etc:
Bio/Vote History
         
Currie Janet Currie Princeton Disagree 7
Gifts serve many functions such as signalling regard and demonstrating social ties with the recipient. Cash transfers don't do this as well
Bio/Vote History
         
Cutler David Cutler Harvard Uncertain 1
I don't want to be a scrooge!
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Disagree 10
This is the sort of narrow view that rightly gives economics bad name.
Bio/Vote History
         
Duffie Darrell Duffie Stanford Disagree 7
A large benefit is the pleasure of choosing something special for the receiver. Maybe one's hand-knit socks are more fun to give than cash!
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 9
"It is the thought that counts" has more truth than some allow. Gifts are more than things.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 5
Implications of a specific gift (signal it sends, behavioral impact) may give additional utility to either the giver or receiver.
Bio/Vote History
         
Einav Liran Einav Stanford Agree 8
Bio/Vote History
         
Fair Ray Fair Yale Uncertain 5
The act of giving or receiving gifts can add value to the gifts.
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Uncertain 6
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 6
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Disagree 10
Instead of proposing to your wife w/diamond ring, you offer a gift card of equal value. Efficient--if you don't count your hospital bills.
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 5
generally agree but exposes neoclassical econ limitations bc it excludes utility from gift giver or recipient choosing/receiving a gift.
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 8
Giver informs receiver of novel experience. And (John Solow) giver can't enjoy directly, but only with participation of receiver (jewelry)
-see background information here
Bio/Vote History
         
Hart Oliver Hart Harvard Disagree 10
An assistant might prefer cash. For a friend a present that shows that you have thought about what matters to them might mean much more.
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Disagree 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Strongly Agree 10
Bio/Vote History
         
Judd Kenneth Judd Stanford Disagree 7
Recipients often want to know that the giver spent time thinking about the gift and acquiring it. Giving cash is too easy in their eyes.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 7
In some cases, non-pecuniary values are important, but in general, the statement is true.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 7
Motivation for the present has to be non-monetary -- but try giving your spouse cash!
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 5
I know the argument (see link), but a costly signal can be worthwhile.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 8
Only an economist could think like this.
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 9
Disagree because the value is the thought behind selecting the present, not the cash involved. So true for thoughtless presents.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Uncertain 8
The judgment would seem to depend on the giver's motivation.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 6
Bio/Vote History
         
Samuelson Larry Samuelson Yale Strongly Disagree 10
Gift giving is a form of communication. Comparing the gift to what the recepient would purchase with cash misses the esssence of gifts.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Uncertain 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 5
Generally, of course. But shopping takes time, and some gifts you would never have shopped for turn out to satisfy unsuspected preferences.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Strongly Disagree 10
Balderdash. This narrow notion of "efficiency" -- and what life is about -- gives economists a bad name. Here's to the winter solstice.
Bio/Vote History
         
Shimer Robert Shimer Chicago Disagree 7
Many reasons why gifts may be better than cash. Signaling thoughtfulness. Specialized knowledge of giver. Gifts from travels...
Bio/Vote History
         
Shin Hyun Song Shin Princeton Did Not Answer
Bio/Vote History
         
Stokey Nancy Stokey Chicago Uncertain 10
For many (most?) gifts, "efficiency" is not the point.
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 3
Is this a trivial price theory quiz or an interesting behavioral question.? To test price theory, try a cash gift next Valentine's day.
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 10
Bah, humbug. Such a claim takes an oversimplified model too seriously. Gifts can serve many purposes.
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

chicago booth