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Is There Deadweight Loss In Holiday Rewards?, Kevin F. Hallock

Economics Faculty Publications

An interesting and provocative study was conducted by Joel Waldfogel of the University of Minnesota some 20 years ago. He wrote "The Deadweight Loss of Christmas." Waldfogel was not only discussing Christmas but noted that the ideas could apply to other holidays with gift-giving rituals. The study noted that although gift giving is generally applauded by economists since it is a way to help the macro economy, there is another side to the story. A problem with gift giving (or non-monetary rewards) is that the gift giver often does not perfectly know the preferences of the person receiving the gift. …