The concept of gift giving for the December holidays is one that goes very far back into history, yet it is only through the rise of the commercialism that people have begun giving gifts in the mass quantities that we as a society are used to. Instead of one meaningful gift, the gift giver is more inclined to purchase more less meaningful gifts, in order to try and exceed the utility derived from a high-quality gift. However, if we follow the law of diminishing marginal utility, the more of these smaller gifts that we receive the less utility we will get from them. This raises the question of what the proper gift-giving protocol is if the goal is to maximize the utility derived from the exchange. Logically, the way to maximize utility is to give cash, however, this is not acceptable in society and can, in fact, take away from the utility derived because there is not as much thought put into the gift. Gift cards are ways to try and give cash in a more socially acceptable way, unfortunately, people can often get stuck with cards to stores they don't like or ones that aren't able to be used in their area, making the gift useless, minimizing its utility. These gift giving methods can help solve the dilemma of buying one really nice gift or a bunch of small gifts. Additionally, the concept of Christmas lists can help ensure that people get the gifts they want, generating a large amount of utility from the exchange, yet this takes away from the utility generated by getting the same gift without requesting it first. As we approach the holiday season, these will be options to consider as we hope to maximize the utility our family gets from these exchanges throughout the holiday season.
Sources
https://www.livemint.com/Money/dHCNzJiNNnBN6YqgT2wb1J/How-do-economists-view-Christmas.html
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I think that this was a great blog that did a good job covering diminishing marginal utility. Christmas gifting can be hard as a receiver and gifter. On the side of the gifter, there is the issue of whether you should buy more small things that have a cheaper cost, or whether one should buy one present that is expensive. If you buy just one present, there is a possibility the receiver will not like it, or be left wanting more. If you buy many little things, they may be left feeling unsatisfied with the quality of what they get. On the side of the receiver, if you make a list, the chances of getting what you want increase, but the surprise element is gone, and vise versa for not making a list.
ReplyDeleteMarginal utility in gift giving is interesting because there are so many factors to consider, and it looks like you covered a lot of them. I agree that having a wish list or something similar to it would be ideal. That way, the gifter seems to put thought and effort into the gift while getting something they know will be appreciated. The receiver of the gift also does not need to use effort to use it, unlike cash or a gift card.
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