Scroogenomics

Economists have long understood that utility (the satisfaction we receive from engaing in activities) is subjective. Most intermediate microeconomics textbooks will demonstrate this point by working through the exercise of showing that cash is preferred to a gift in kind. This application demonstrates that when an individual is given cash he/she can use it in a way that will provide them the greatest utility. Now Joel Waldfogel at Wharton University of Pennsylvania is applying this idea to how we buy Christmas presents.

He argues "if you buy something for me, and you spend $50, since you don't know what I like, and you don't know what I have, you may buy something I wouldn't pay anything for. And so you could turn the real resources required to make things into something of no value to me. And that would destroy value."

Read more: http://www.time.com/time/business/article/0,8599,1938367,00.html#ixzz0XDpMO5IL