"Father Christmas" by The Kinks
and is replicated here as part of the SERC Pedagogic Service.
This flash animation for the song "Father Christmas" by The Kinks demonstrates the deadweight loss associated with gift giving. The instructor can then extend the analysis by discussing how this relates to public policy (cash vs. inkind transfer payments). The animation can be coupled with Joel Waldfogel's article "The Deadweight Loss of Christmas" to emphasize the key concepts. To explore the alternative where gifts may be preferred to cash, the instructor can also show a clip from the series Seinfeld ("The Deal"). In the clip, Elaine is very unhappy when Jerry gives her cash for her birthday.
- To illustrate that cash gifts provide more utility than gifts in kind.
- To understand how cash and inkind transfers may affect recipients' well-being.
- To examine how gift-giving may be a form of signaling.
Context for Use
Description and Teaching Materials
Then, go to http://www.musicforecon.com. (If you have not registered, you must to get a password to have access to the library of animations.) Scan down and click on the animation for "Father Christmas."
After the animation, ask the students if they would have preferred getting money for Christmas rather than gifts. Relate this to various government programs such as unemployment compensation and food stamps.
If any students report that they like getting gifts, ask them why. Then show a segment from Seinfeld, "The Deal." It can be found on Season 2, Disc 4. The scene runs from 15:50 to 18:50. Ask students to discuss why Elaine was so unhappy with Jerry's monetary gift.
Some PowerPoint slides you may want to use are below.
PowerPoint Slides on Gift Giving (PowerPoint 166kB Aug4 10)
Teaching Notes and Tips
You may want to ask students to read Waldfogel's paper after the class discussion. (If the students read it beforehand, it may alter their answers to the questions about the values placed on gifts.)
References and Resources
The article referenced above is:
Waldfogel, Joel. 1993. "The Deadweight Loss of Christmas." American Economic Review 83(5): 1328-1336.
The Seinfeld series has numerous clips that pertain to economics. See The Economics of Seinfeld for more details.