1. WORD STUDIES

2. The word of the day is “gift”

3. Why study “gift”?

4. Why study “gift”? Because we traditionally give gifts at Christmastime. and Because God gave humans the ultimate gift.

5. Definition: gift: Something given voluntarily without payment in return, as to show favor toward someone, honor an occasion, or make a gesture of assistance; present. (http://dictionary.reference.com/browse/gift) true gift: a unilateral transfer of value that does not incur any obligation to reciprocate to the giver. "Gifts" that are predicated upon the expectation of a return gift or which elicit a return gift are actually quid pro quo transactions.

6. Two issues: The giving of physical gifts is an inefficient means of reallocating resources. We tend to undervalue gifts relative to the same things that we would have to work and pay for.

7. Inefficient reallocation of resources: In a 1993 paper, an economist reported the results of a survey of 86 students for which the average value of their Christmas gifts was $438, but the students valued the same gifts on average at $313. (Joel Waldfogle, “The Deadweight Loss of Christmas,” https://www.amherst.edu/media/view/104699/original/christmas.pdf) continued...

8. Inefficient reallocation of resources: In a 1993 paper, an economist reported the results of a survey of 86 students for which the average value of their Christmas gifts was $438, but the students valued the same gifts on average at $313. (Joel Waldfogle, “The Deadweight Loss of Christmas,” https://www.amherst.edu/media/view/104699/original/christmas.pdf) This $125 difference is a “deadweight loss” of value, or value of only 71.5 cents on the dollar. continued...

9. Inefficient reallocation of resources: In a 1993 paper, an economist reported the results of a survey of 86 students for which the average value of their Christmas gifts was $438, but the students valued the same gifts on average at $313. (Joel Waldfogle, “The Deadweight Loss of Christmas,” https://www.amherst.edu/media/view/104699/original/christmas.pdf) This $125 difference is a “deadweight loss” of value, or value of only 71.5 cents on the dollar. This is a significant economic inefficiency that left the recipients worse off than if they had made their own consumption choices with equal amounts of cash. continued...

10. continuing... Another study of German students’ gifts from relatives concluded that “the efficiency loss of Christmas presents is highest for gifts from grandparents.”

11. continuing... Another study of German students’ gifts from relatives concluded that “the efficiency loss of Christmas presents is highest for gifts from grandparents.” The recommended approach is for a shopper to ask himself: “Do I know what this person wants? Do I have even a sporting chance of buying something he might like?”

12. continuing... Another study of German students’ gifts from relatives concluded that “the efficiency loss of Christmas presents is highest for gifts from grandparents.” The recommended approach is for a shopper to ask himself: “Do I know what this person wants? Do I have even a sporting chance of buying something he might like?” Don’t know? Giving cash or gift cards would be more efficient since the recipient can use the money to purchase what he wants with no deadweight loss of value.

13. An overlooked source of value: The analysis in the paper overlooks the non-monetary income or "psychic benefit" that the giver enjoys when selecting and giving the non-cash gift.

14. An overlooked source of value: The analysis in the paper overlooks the non-monetary income or "psychic benefit" that the giver enjoys when selecting and giving the non-cash gift. It is efficient for a person to continue giving non-cash gifts as long as he estimates that his psychic benefit exceeds the deadweight loss of value experienced by the gift recipient.

15. An overlooked source of value: The analysis in the paper overlooks the non-monetary income or "psychic benefit" that the giver enjoys when selecting and giving the non-cash gift. It is efficient for a person to continue giving non-cash gifts as long as he estimates that his psychic benefit exceeds the deadweight loss of value experienced by the gift recipient. Unfortunately, that comparison can almost never be made explicitly.

16. Undervaluing gifts: We value what we have to work for. Do we value less what is given to us free of charge?

17. Undervaluing gifts: We value what we have to work for. Do we value less what is given to us free of charge? Abundance is characterized by zero prices; scarcity is indicated when prices are above zero.

18. Undervaluing gifts: We value what we have to work for. Do we value less what is given to us free of charge? Abundance is characterized by zero prices; scarcity is indicated when prices are above zero. Although economists are fond of asserting that "there is no such thing as a free lunch," this is true only from the perspective of society taken as a whole.

19. Undervaluing gifts: We value what we have to work for. Do we value less what is given to us free of charge? Abundance is characterized by zero prices; scarcity is indicated when prices are above zero. Although economists are fond of asserting that "there is no such thing as a free lunch," this is true only from the perspective of society taken as a whole. Any single member of society can enjoy the gift of a free lunch at the expense of other members of society.

20. Gifts are a problem. Gifts constitute a problem for human behavior because they seem to violate the true scarcity nature of the items given.

21. Gifts are a problem. Gifts constitute a problem for human behavior because they seem to violate the true scarcity nature of the items given. The gift (for example, a piece of expensive jewelry) may have cost the giver dearly, but for the recipient it is like a “free good.”

22. Gifts are a problem. Gifts constitute a problem for human behavior because they seem to violate the true scarcity nature of the items given. The gift (for example, a piece of expensive jewelry) may have cost the giver dearly, but for the recipient it is like a “free good.” Gifts that we undervalue (because they are “free”) end up in closets or garage sales, or they may be “regifted.”

23. A parable of undervaluation: The parable in Matthew 22:1-14 and Luke 14:15-24 is about a king who gives a wedding feast for his son, but those invited have other priorities and make their excuses.

24. A parable of undervaluation: The parable in Matthew 22:1-14 and Luke 14:15-24 is about a king who gives a wedding feast for his son, but those invited have other priorities and make their excuses. The invitees would receive the wedding feast free of charge.

25. A parable of undervaluation: The parable in Matthew 22:1-14 and Luke 14:15-24 is about a king who gives a wedding feast for his son, but those invited have other priorities and make their excuses. The invitees would receive the wedding feast free of charge. They make their excuses because they undervalue the benefits of attendance relative to other activities.

26. A parable of undervaluation: The parable in Matthew 22:1-14 and Luke 14:15-24 is about a king who gives a wedding feast for his son, but those invited have other priorities and make their excuses. The invitees would receive the wedding feast free of charge. They make their excuses because they undervalue the benefits of attendance relative to other activities. What does the king do with those who decline his “free gift”?

27. Ultimate Gifts: God may be thought by Jews and Christians to be the ultimate giver of true gifts to humanity.

28. Ultimate Gifts: God may be thought by Jews and Christians to be the ultimate giver of true gifts to humanity. A "true gift" is a unilateral transfer of value that does not incur any obligation to reciprocate to the giver.

29. Ultimate Gifts: God may be thought by Jews and Christians to be the ultimate giver of true gifts to humanity. A "true gift" is a unilateral transfer of value that does not incur any obligation to reciprocate to the giver. A Judeo-Christian belief is that God created the universe and has “given” it to humans to use.

30. Ultimate Gifts: God may be thought by Jews and Christians to be the ultimate giver of true gifts to humanity. A "true gift" is a unilateral transfer of value that does not incur any obligation to reciprocate to the giver. A Judeo-Christian belief is that God created the universe and has “given” it to humans to use. Jesus, of course, is God’s ultimate true gift to humanity.

31. What is salvation worth? God offers salvation to humans. The price is repenting of their sins and believing in Jesus as God’s only son.

32. What is salvation worth? God offers salvation to humans. The price is repenting of their sins and believing in Jesus as God’s only son. Is the price too high or too low?

33. What is salvation worth? God offers salvation to humans. The price is repenting of their sins and believing in Jesus as God’s only son. Is the price too high or too low? For some non-believers, repenting (changing their sinful ways) must be a price too high.

34. What is salvation worth? God offers salvation to humans. The price is repenting of their sins and believing in Jesus as God’s only son. Is the price too high or too low? For some non-believers, repenting (changing their sinful ways) must be a price too high. For other non-believers, the price appears so low that they undervalue the offer.

35. What is salvation worth? God offers salvation to humans. The price is repenting of their sins and believing in Jesus as God’s only son. Is the price too high or too low? For some non-believers, repenting (changing their sinful ways) must be a price too high. For other non-believers, the price appears so low that they undervalue the offer. Since salvation is nearly “free” for the taking, is it too cheap? Do people undervalue the gift of salvation offered by God?

36. This presentation may be viewed in essay form on-line at: http://www.dickstanford.com Click on “Selected Essays” Click on “Gifts”