The Deadweight Loss of Christmas - Reply

Abstract

In this paper, we study the welfare e¤ects of Christmas presents with a focus on the e¤ect of presents for gift-givers. Based on a survey among students at the University of Göttingen, Germany, we …nd that the vast majority of gift-givers prefers in-kind gifts compared to gifts of money. The average present in our survey has a price of 36 Euro and results in a "giver's surplus" of 10 Euro. This indicates a welfare gain of approximately 143% from the average giver's perspective. The welfare gain for presents to friends and partners is lower than for presents to close family members. Our empirical analysis shows a negative e¤ect of a present's price on the welfare gain for gift-givers.