"Father Christmas" by The Kinks

• 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.

This works well when discussing the impacts of transfer programs on recipients' utility. It works well to perform the experiment described in Waldfogel's paper before showing the animation. This should take about 5 minutes. The flash animation runs the length of the song (3:46). Class discussion after the animation should take about 5-10 minutes. Once the discussion turns to why gifts may be preferred to money, the Seinfeld clip can be shown. It runs 3 minutes, and then discussion following the clip will likely last for another 5 minutes. The total time for the discussion and clips should be around 15-20 minutes.

Start by asking students to remember the gifts they received the previous Christmas. They should then try to estimate the dollar cost of the gifts. Next, ask students to place a dollar value on the gifts (how much they would be willing to pay for them). Last, have the students report the difference between the two values.

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)

Make sure you have a password for using the Music for Economics website.

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.)

Class discussion should sufficiently allow then instructor to determine if students understand the concepts. A greater focus on public policy could occur by asking students to evaluate various government programs, considering the reasons they may be in cash or inkind form and the implications for recipients' well-being.