Gift Giving is Irrational

Hardheaded economists have looked at gift giving and concluded that gift giving is irrational (Scroogenomics). Research shows that people value gifts they receive 20 percent less per dollar than products they purchase for themselves. Since $65 billion (approximately) is spent in the US on gifts, 20% of that is about $12 or $13 billion a year in destroyed or wasted value. Worldwide, the number is about twice that big.

So, let's see: the bond market is irrationally selling derivatives with no value; mortgage lenders are irrationally making subprime loans with no value; investors are irrationally buying dot.com stocks without value; physicians are irrationally ordering tests without medical value; and people are irrationally giving gifts to their acquaintances who place little value on what they get.

Are any economic actors doing anything rational? Whatever happened to homo economicus? Is the rational actor, after all, just a neoliberal fantasy?