It’s that time of the year, again. Silvia Merler reviews major contributions to the literature on the controversial topic of the deadweight loss of Christmas.
In 1993, Joel Waldfogel made the well-known seminal contribution in the American Economic Review, outlining the problem of the “deadweight loss of Christmas”. Waldfogel argued in favour of shifting the festive focus from the effects of Christmas spending on the economy onto the microeconomic implications of gift-giving. At the micro level, gift-giving is prone to a potential deadweight loss problem, because the best the gift-giver can do is to replicate the choice that the recipient would have made. While it is possible that the recipient may value the gift more than its price, it is more likely that the recipient will be leftRead More »