It's a common funny trope and/or slander, that economists are TOTAL GRINCHES.
Every time the holidays come around, some uppity schmuck with an econ degree will point out that Christmas gift giving is inefficient—and the worst part is that he (yes "he") is right!
Anyone who's tried to come up with a decent gift for someone who has everything they want (well-off relatives and/or grandpas or dads are typical examples here) know well these problems: Anything you could gift them, and that they would like, they could have already gotten for themselves.
Besides, we aren't always so satisfied with the gifts we receive. Explains Tyler Cowen for Marginal Revolution University, eloquent as ever:
...you face a knowledge problem: you don’t know everything about [your gift receiver's] wants and needs. You also have an incentive problem: oftentimes people aren’t quite as careful choosing a gift for others as they would be if buying something for themselves. We’ve all received a present that we didn’t really want. When that happens, the value that we place on the gift can be less than its cost. According to research by economist Joel Waldfogel, gift givers spend an average of $50 on gifts that recipients only value at $40.
It's settled: Christmas gift giving is one big, inefficient loss-maker.
Now, you could try to rescue the gift-giving tradition here by invoking subjective value (#798342) and that the purpose is social and/or communal rather than strictly profit- or utility-maximizing. That's fair. But less fun—and less economics-y:
OK, so what's this got to do with money?
Money is the most salable, most liquid, most easily tradable good (=item, token, etc—pick whichever term you prefer) in the economy.
That grinch economist from above? He always seems to suggest that money is the best gift; it keeps intact the gift-giving such that you cannot face a monetary loss. $50 to you is the same as $50 to me? (ah, shit... marginal utility of income/wealth vs interpersonal utility comparisons...). But point stands: You can just go out and buy the things that you want. Moreover, money is FUNGIBLE, so you can it with previous holdings that add up for a larger purchase, or stash it into savings.
Yes, but boring. And giving people physical cash in the year of our lord 2024 might just inconvenience them. If they, like me, live in mostly cashless societies, a cash gift just saddles me with extra hurdles! What, you gonna Venmo them their Christmas gift?! Time an ACH transfer for Christmas Day (oops, banks closed... #fiatmoney).
OK, so then give gift cards? It's money, it's spendable, but it's a gift?
Yes, nice try. Even aside from the deadweight losses or information problems arising from gift-giving, gifting something that is even a smudge less liquid than the most liquid thing introduces problems: It's just a worse, clunky form of money since I can only spend it in one store!
And as I pointed out in a cute Christmas-y article about five years ago, gift cards definitely have more moneyness than other things:
When I give my sister a nonfiction book for Christmas, neither of us presumes that she’ll use it in payments for food, rent, clothes, travel, or something else that she desires. Indeed, you’d be hard pressed to find anybody who’d accept a 300-odd-page chunk of paper adorned with the Penguin Press stamp in exchange for anything, so she couldn’t really trade it away even if she wanted to.
If I give her a gift card to Strand in New York or Foyles in London — two of our favorite bookstores in the world — I very much expect her to trade away that little piece of plastic for some literary masterpiece, but I’d be surprised if Strand uses that card in turn to pay its suppliers. That’s possible, as employee-privilege trade credits do exist (and restaurants and cafés around the world habitually provide their employees with food as part of their compensation), but unlikely.
yeaah... but they also get stuck. It's kind of tricky to spend unless you have an immediate and obvious expense coming up. I sat on two Amazon gift cards this year for about six months—having no occasion to place an order from there just yet. In the meantime, those sneaky proto-banks enjoy the free float (#743123). Can't say my heart made Christmas snow angles from knowing that I ever so slightly helped bankroll Amazon.
Ergo, gift cards just aren't that money-like; they're very clunky, and don't actually have that much moneyness.
Bitcoiners have this conundrum SOOOOR-TEEED: Satscards! (or any other such product...)
It's actual money—our money!—in a fancy-looking card. What's not to like?!
Anyway, this MONEY CLASS doesn't have much of a conclusion, except perhaps that I get to hammer home "Money is the most salable, most liquid, most easily tradable good"—repeat this phrase seven times in front of the mirror, and then sometime in the after-dinner lull, perhaps the moment presents itself where your newfound knowledge can humbly shine!
Tl;dr: maybe we assign Christmas a(n monetary) economics-free zone? where magical shit like flying reindeers and Santa Clauses happen but thorough economic analysis is left at the door.
MERRY CHRISTMAS, STACKERS!
That's today's little money lesson
Peace
/J