Tithing makes quite a lot of sense

Dec 22 JDN 2458840

Christmas is coming soon, and it is a season of giving: Not only gifts to those we love, but also to charities that help people around the world. It’s a theme of some of our most classic Christmas stories, like A Christmas Carol. (I do have to admit: Scrooge really isn’t wrong for not wanting to give to some random charity without any chance to evaluate it. But I also get the impression he wasn’t giving a lot to evaluated charities either.) And people do really give more around this time of year: Charitable donation rates peak in November and December (though that may also have something to do with tax deductions).

Where should we give? This is not an easy question, but it’s one that we now have tools to answer: There are various independent charity evaluation agencies, like GiveWell and Charity Navigator, which can at least provide some idea of which charities are most cost-effective.

How much should we give? This question is a good deal harder.

Perhaps a perfect being would determine their own precise marginal utility of wealth, and the marginal utility of spending on every possible charity, and give of your wealth to the best possible charity up until those two marginal utilities are equal. Since $1 to UNICEF or the Against Malaria Foundation saves about 0.02 QALY, and (unless you’re a billionaire) you don’t have enough money to meaningfully affect the budget of UNICEF, you’d probably need to give until you are yourself at the UN poverty level of $1.90 per day.

I don’t know of anyone who does this. Even Peter Singer, who writes books that essentially tell us to do this, doesn’t do this. I’m not sure it’s humanly possible to do this. Indeed, I’m not even so sure that a perfect being would do it, since it would require destroying their own life and their own future potential.

How about we all give 10%? In other words, how about we tithe? Yes, it sounds arbitrary—because it is. It could just as well have been 8% or 11%. Perhaps one-tenth feels natural to a base-10 culture made of 10-fingered beings, and if we used a base-12 numeral system we’d think in terms of giving one-twelfth instead. But 10% feels reasonable to a lot of people, it has a lot of cultural support behind it already, and it has become a Schelling point for coordination on this otherwise intractable problem. We need to draw the line somewhere, and it might as well be there.

As Slate Star Codex put it:

It’s ten percent because that’s the standard decreed by Giving What We Can and the effective altruist community. Why should we believe their standard? I think we should believe it because if we reject it in favor of “No, you are a bad person unless you give all of it,” then everyone will just sit around feeling very guilty and doing nothing. But if we very clearly say “You have discharged your moral duty if you give ten percent or more,” then many people will give ten percent or more. The most important thing is having a Schelling point, and ten percent is nice, round, divinely ordained, and – crucially – the Schelling point upon which we have already settled. It is an active Schelling point. If you give ten percent, you can have your name on a nice list and get access to a secret forum on the Giving What We Can site which is actually pretty boring.

It’s ten percent because definitions were made for Man, not Man for definitions, and if we define “good person” in a way such that everyone is sitting around miserable because they can’t reach an unobtainable standard, we are stupid definition-makers. If we are smart definition-makers, we will define it in whichever way which makes it the most effective tool to convince people to give at least that much.

I think it would be also reasonable to adjust this proportion according to your household income. If you are extremely poor, give a token amount: Perhaps 1% or 2%. (As it stands, most poor people already give more than this, and most rich people give less.) If you are somewhat below the median household income, give a bit less: Perhaps 6% or 8%. (I currently give 8%; I plan to increase to 10% once I get a higher-paying job after graduation.) If you are somewhat above, give a bit more: Perhaps 12% or 15%. If you are spectacularly rich, maybe you should give as much as 25%.

Is 10% enough? Well, actually, if everyone gave, even 1% would probably be enough. The total GDP of the First World is about $40 trillion; 1% of that is $400 billion per year, which is more than enough to end world hunger. But since we know that not everyone will give, we need to adjust our standard upward so that those who do give will give enough. (There’s actually an optimization problem here which is basically equivalent to finding a monopoly’s profit-maximizing price.) And just ending world hunger probably isn’t enough; there is plenty of disease to cure, education to improve, research to do, and ecology to protect. If say a third of First World people give 10%, that would be about $1.3 trillion, which would be enough money to at least make a huge difference in all those areas.

You can decide for yourself where you think you should draw the line. But 10% is a pretty good benchmark, and above all—please, give something. If you give anything, you are probably already above average. A large proportion of people give nothing at all. (Only 24% of US tax returns include a charitable deduction—though, to be fair, a lot of us donate but don’t itemize deductions. Even once you account for that, only about 60% of US households give to charity in any given year.)

The best thing we can do to help them is let them in


 

Dec 23 JDN 2458476

This is a Christmas post, but not like most of my other Christmas posts. It’s not going to be an upbeat post about the effects of holidays on the economy, or the psychology of gift-giving, or the game theory that underlies the whole concept of a “holiday”.

No, today is about an urgent moral crisis. This post isn’t about Christmas as a weird but delightful syncretic solstice celebration. This post is about the so-called “spirit of Christmas”, a spirit of compassion and generosity that our country is clearly not living up to.

At the time of writing, the story had just come out: Jakelin Maquin, a 7-year-old girl from Guatemala died in the custody of US border agents.

Even if it’s true that the Border Patrol did everything they could to help her once they found out she was dying (and the reports coming out suggest that this is in fact the case), this death was still entirely preventable.

The first question we should ask is very basic: Why are there little girls in custody of border agents?
The next question is even more fundamental than that: Why are there border agents?

There are now 15,000 children being held by US Border Patrol. There should not be even one. The very concept of imprisoning children for crossing the border, under any circumstances, is a human rights violation. And yes, this is new, and it is specific to Donald Trump: Bush and Obama never separated children from their families this way. And while two-thirds of Americans oppose this policy, a majority of Republicans support it—this child’s blood is on their hands too.

Yet despite the gulf between the two major parties, the majority of Americans do support the idea of restricting immigration in general. And what I want to know is: Why? What gives us that right?

Let’s be absolutely clear about what “restricting immigration” means. It means that when someone decides they want to come to our country, either to escape oppression, work toward a better life, or simply to live with their family who came here before, men with guns come and lock them up.

We don’t politely ask them to leave. We don’t even fine them or tax them for entering. We lock them in detention camps, or force them to return to the country they came from which may be ruled by a dictator or a drug cartel.

Honestly, even the level of border security US citizens are subjected to is appalling: We’ve somehow come to think of it as normal that whenever you get on an airplane, you are first run through a body scanner, while all your belongings are inspected and scanned, and if you are found carrying any contraband—or if you even say the wrong thing—you can be summarily detained. This is literally Orwellian. “Papers, please” is the refrain of a tyrannical regime, not a liberal democracy.

If we truly believe in the spirit of compassion and generosity, we must let these people in. We don’t even have to do anything; we just need to stop violently resisting them. Stop pointing guns at them, stop locking them away. How is “Stop pointing guns at children” controversial?

I could write an entire post about the benefits for Americans of more open immigration. But honestly, we shouldn’t even care. It doesn’t matter whether immigration creates jobs, or destroys jobs, or decreases crime, or increases crime. We should not be locking up children in camps.

If we really believe in the spirit of compassion and generosity, the only thing we should care about is whether immigration is good for the immigrants. And it obviously is, or they wouldn’t be willing to go to such lengths to accomplish it. But I don’t think most people realize just how large the benefits of immigration are.

I’m going to focus on Guatemala, because that’s where Jakelin Maqin was from.

Guatemala’s life expectancy at birth is 73 years. The life expectancy for recent Hispanic immigrants to the US is 82 years. Crossing that border can give you nine years of life.

And what about income? GDP per capita PPP in the US is almost $60,000 per year. In Guatemala? Just over $8,000. Of course, that’s not accounting for the fact that Guatemalans are less educated; but even the exact same worker emigrating from there to here can greatly increase their income. The minimum wage in Guatemala is 90 GTQ per day, which is about $11.64. For a typical 8-hour workday, the US minimum wage of $7.25 per hour comes to $58 per day. That same exact worker can quintuple their income just by getting a job on the other side of the border.

Almost 60 percent of Guatemalans live in poverty. Over 20% live below the UN extreme poverty line. A full 11% of Guatemala’s GDP is remittances: Money that immigrants pay to help their families back home. A further 7% is exports to the US. This means that almost a fifth of Guatemala’s economy is dependent on the United States.

For comparison, less than 0.5% of Americans live in extreme poverty. (The UN recently claimed almost 6%; the Trump administration has claimed only 0.1% which is even more dubious. Both methodologies are deeply flawed; in particular, the UN report looks at income, not consumption—and consumption is what matters.) The overall poverty rate in the US is about 12%.

These figures are still appallingly high for a country as rich as the US; our extreme poverty rate should be strictly zero, a policy decision which could be implemented immediately and permanently in the form of a basic income of $700 per person per year, at a total expenditure of only $224 billion per year—about a third of the military budget. The net cost would in fact be far smaller than that, because we’d immediately turn around and spend that money. In fact, had this been done at the trough of the Great Recession, it would almost certainly have saved the government money.

Making our overall poverty rate strictly zero would be more challenging, but not obviously infeasible; since the poverty line is about $12,000 per person per year, it would take a basic income of that much to eliminate poverty, which would cost about $3.8 trillion per year. This is a huge expenditure, comparable as a proportion of GDP to the First World War (though still less than the Second). On the other hand, it would end poverty in America immediately and forever.

But even as things currently stand, the contrast between Guatemala and the US could hardly be starker: Immigrants are moving from a country with 60% poverty and 20% extreme poverty to one with 12% poverty and 0.5% extreme poverty.

Guatemala is a particularly extreme example; things are not as bad in Mexico or Cuba, for example. But the general pattern is a very consistent one: Immigrants come to the United States because things are very bad where they come from and their chances of living a better life here are much higher.

The best way to help these people, at Christmas and all year round, literally couldn’t be easier:

Let them in.

Halloween is kind of a weird holiday.

Oct 28 JDN 2458420

I suppose most holidays are weird if you look at them from an outside perspective; but I think Halloween especially so, because we don’t even seem to be clear about what we’re celebrating at this point.

Christmas is ostensibly about the anniversary of the birth of Jesus; New Year’s is about the completion of the year; Thanksgiving is about the founding of the United States and being thankful for what we have; Independence Day is about declaring independence from Great Britain.

But what’s Halloween about, again? Why do we have our children dress up in costumes and go beg candy from our neighbors?

The name comes originally from “All Hallow’s Eve”, the beginning of the three-day Christian holiday Allhallowtide of rememberance for the dead, which has merged in most Latin American countries with the traditional holiday Dia de los Muertos. But most Americans don’t actually celebrate the rest of Allhallowtide; we just do the candy and costume thing on Halloween.

The parts involving costumes and pumpkins actually seem to be drawn from Celtic folk traditions celebrating the ending of harvest season and the coming of the winter months. It’s celebrated so early because, well, in Ireland and Scotland it gets dark and cold pretty early in the year.

One tradition I sort of wish we’d kept from the Celtic festival is that of pouring molten lead into water to watch it rapidly solidify. Those guys really knew how to have a good time. It may have originated as a form of molybdomancy, which I officially declare the word of the day. Fortunately by the power of YouTube, we too can enjoy the excitement of molten lead without the usual fear of third-degree burns. The only divination ritual that we kept as a Halloween activity is the far tamer apple-bobbing.

The trick-or-treating part and especially the costume part originated in the Medieval performance art of mumming, which is also related to the modern concept of mime. Basically, these were traveling performance troupes who went around dressed up as mythological figures, did battle silently, and then bowed and passed their hats around for money. It’s like busking, basically.

The costumes were originally religious or mythological figures, then became supernatural creatures more generally, and nowadays the most popular costumes tend to be superheroes. And since apparently we didn’t want people giving out money to our children, we went for candy instead. Yet I’m sure you could write a really convincing economics paper about why candy is way less efficient, making both the parents giving, the child receiving, and the parents of the child receiving less happy than the same amount of money would (and unlike the similar argument against Christmas presents, I’m actually sort of inclined to agree; it’s not a personal gesture, and what in the world do you need with all that candy?).

So apparently we’re celebrating the end of the harvest, and also mourning the dead, and also being mimes, and also emulating pagan divination rituals, but mainly we’re dressed up like superheroes and begging for candy? Like I said, it’s kind of a weird holiday.

But maybe none of that ultimately matters. The joy of holidays isn’t really in following some ancient ritual whose religious significance is now lost on us; it’s in the togetherness we feel when we manage to all coordinate our activities and do something joyful and out of the ordinary that we don’t have to do by ourselves. I think deep down we all sort of wish we could dress up as superheroes more of the time, but society frowns upon that sort of behavior most of the year; this is our one chance to do it, so we’ll take the chance when we get it.

Influenza vaccination, herd immunity, and the Tragedy of the Commons

Dec 24, JDN 2458112

Usually around this time of year I do a sort of “Christmas special” blog post, something about holidays or gifts. But this year I have a rather different seasonal idea in mind. It’s not just the holiday season; it’s also flu season.

Each year, influenza kills over 56,000 people in the US, and between 300,000 and 600,000 people worldwide, mostly in the winter months. And yet, in any given year, only about 40% of adults and 60% of children get the flu vaccine.

The reason for this should be obvious to any student of economics: It’s a Tragedy of the Commons. If enough people got vaccinated that we attained reliable herd immunity (which would take about 90%), then almost nobody would get influenza, and the death rate would plummet. But for any given individual, the vaccine is actually not all that effective. Your risk of getting the flu only drops by about half if you receive the vaccine. The effectiveness is particularly low among the elderly, who are also at the highest risk for serious complications due to influenza.

Thus, for any given individual, the incentive to get vaccinated isn’t all that strong, even though society as a whole would be much better off if we all got vaccinated. Your probability of suffering serious complications from influenza is quite low, and wouldn’t be reduced all that much if you got the vaccine; so even though flu vaccines aren’t that costly in terms of time, money, discomfort, and inconvenience, the cost is just high enough that a lot of us don’t bother to get the shot each year.

On an individual level, my advice is simple: Go get a flu shot. Don’t do it just for yourself; do it for everyone around you. You are protecting the most vulnerable people in our society.

But if we really want everyone to get vaccinated, we need a policy response. I can think of two policies that might work, which can be broadly called a “stick” and a “carrot”.

The “stick” approach would be to make vaccination mandatory, as it already is for many childhood vaccines. Some sort of penalty would have to be introduced, but that’s not the real challenge. The real challenge would be how to actually enforce that penalty: How do we tell who is vaccinated and who isn’t?

When schools make vaccination mandatory, they require vaccination records for admission. It would be simple enough to add annual flu vaccines to the list of required shots for high schools and colleges (though no doubt the anti-vax crowd would make a ruckus). But can you make vaccination mandatory for work? That seems like a much larger violation of civil liberties. Alternatively, we could require that people submit medical records with their tax returns to avoid a tax penalty—but the privacy violations there are quite substantial as well.

Hence, I would favor the “carrot” approach: Use government subsidies to provide a positive incentive for vaccination. Don’t simply make vaccination free; actually pay people to get vaccinated. Make the subsidy larger than the actual cost of the shots, and require that the doctors and pharmacies administering them remit the extra to the customers. Something like $20 per shot ought to do it; since the cost of the shots is also around $20, then vaccinating the full 300 million people of the United States every year would cost about $12 billion; this is less than the estimated economic cost of influenza, so it would essentially pay for itself.

$20 isn’t a lot of money for most people; but then, like I said, the time and inconvenience of a flu shot aren’t that large either. There have been moderately successful (but expensive) programs incentivizing doctors to perform vaccinations, but that’s stupid; frankly I’m amazed it worked at all. It’s patients who need incentivized. Doctors will give you a flu shot if you ask them. The problem is that most people don’t ask.

Do this, and we could potentially save tens of thousands of lives every year, for essentially zero net cost. And that sounds to me like a Christmas wish worth making.

The game theory of holidays

Dec 25, JDN 2457748

When this post goes live, it will be Christmas; so I felt I should make the topic somehow involve the subject of Christmas, or holidays in general.

I decided I would pull back for as much perspective as possible, and ask this question: Why do we have holidays in the first place?

All human cultures have holidays, but not the same ones. Cultures with a lot of mutual contact will tend to synchronize their holidays temporally, but still often preserve wildly different rituals on those same holidays. Yes, we celebrate “Christmas” in both the US and in Austria; but I think they are baffled by the Elf on the Shelf and I know that I find the Krampus bizarre and terrifying.

Most cultures from temperate climates have some sort of celebration around the winter solstice, probably because this is an ecologically important time for us. Our food production is about to get much, much lower, so we’d better make sure we have sufficient quantities stored. (In an era of globalization and processed food that lasts for months, this is less important, of course.) But they aren’t the same celebration, and they generally aren’t exactly on the solstice.

What is a holiday, anyway? We all get off work, we visit our families, and we go through a series of ritualized actions with some sort of symbolic cultural meaning. Why do we do this?

First, why not work all year round? Wouldn’t that be more efficient? Well, no, because human beings are subject to exhaustion. We need to rest at least sometimes.

Well, why not simply have each person rest whenever they need to? Well, how do we know they need to? Do we just take their word for it? People might exaggerate their need for rest in order to shirk their duties and free-ride on the work of others.

It would help if we could have pre-scheduled rest times, to remove individual discretion.

Should we have these at the same time for everyone, or at different times for each person?

Well, from the perspective of efficiency, different times for each person would probably make the most sense. We could trade off work in shifts that way, and ensure production keeps moving. So why don’t we do that?
Well, now we get to the game theory part. Do you want to be the only one who gets today off? Or do you want other people to get today off as well?

You probably want other people to be off work today as well, at least your family and friends so that you can spend time with them. In fact, this is probably more important to you than having any particular day off.

We can write this as a normal-form game. Suppose we have four days to choose from, 1 through 4, and two people, who can each decide which day to take off, or they can not take a day off at all. They each get a payoff of 1 if they take the same day off, 0 if they take different days off, and -1 if they don’t take a day off at all. This is our resulting payoff matrix:

1 2 3 4 None
1 1/1 0/0 0/0 0/0 0/-1
2 0/0 1/1 0/0 0/0 0/-1
3 0/0 0/0 1/1 0/0 0/-1
4 0/0 0/0 0/0 1/1 0/-1
None -1/0 -1/0 -1/0 -1/0 -1/-1

 

It’s pretty obvious that each person will take some day off. But which day? How do they decide that?
This is what we call a coordination game; there are many possible equilibria to choose from, and the payoffs are highest if people can somehow coordinate their behavior.

If they can actually coordinate directly, it’s simple; one person should just suggest a day, and since the other one is indifferent, they have no reason not to agree to that day. From that point forward, they have coordinated on a equilibrium (a Nash equilibrium, in point of fact).

But suppose they can’t talk to each other, or suppose there aren’t two people to coordinate but dozens, or hundreds—or even thousands, once you include all the interlocking social networks. How could they find a way to coordinate on the same day?

They need something more intuitive, some “obvious” choice that they can call upon that they hope everyone else will as well. Even if they can’t communicate, as long as they can observe whether their coordination has succeeded or failed they can try to set these “obvious” choices by successive trial and error.

The result is what we call a Schelling point; players converge on this equilibrium not because there’s actually anything better about it, but because it seems obvious and they expect everyone else to think it will also seem obvious.

This is what I think is happening with holidays. Yes, we make up stories to justify them, or sometimes even have genuine reasons for them (Independence Day actually makes sense being on July 4, for instance), but the ultimate reason why we have a holiday on one day rather than other is that we had to have it some time, and this was a way of breaking the deadlock and finally setting a date.

In fact, weekends are probably a more optimal solution to this coordination problem than holidays, because human beings need rest on a fairly regular basis, not just every few months. Holiday seasons now serve more as an opportunity to have long vacations that allow travel, rather than as a rest between work days. But even those we had to originally justify as a matter of religion: Jews would not work on Saturday, Christians would not work on Sunday, so together we will not work on Saturday or Sunday. The logic here is hardly impeccable (why not make it religion-specific, for example?), but it was enough to give us a Schelling point.

This makes me wonder about what it would take to create a new holiday. How could we actually get people to celebrate Darwin Day or Sagan Day on a large scale, for example? Darwin and Sagan are both a lot more worth celebrating than most of the people who get holidays—Columbus especially leaps to mind. But even among those of us who really love Darwin and Sagan, these are sort of half-hearted celebrations that never attain the same status as Easter, much less Thanksgiving or Christmas.

I’d also like to secularize—or at least ecumenicalize—the winter solstice celebration. Christianity shouldn’t have a monopoly on what is really something like a human universal, or at least a “humans who live in temperate climates” universal. It really isn’t Christmas anyway; most of what we do is celebrating Yule, compounded by a modern expression in mass consumption that is thoroughly borne of modern capitalism. We have no reason to think Jesus was actually born in December, much less on the 25th. But that’s around the time when lots of other celebrations were going on anyway, and it’s much easier to convince people that they should change the name of their holiday than that they should stop celebrating it and start celebrating something else—I think precisely because that still preserves the Schelling point.

Creating holidays has obviously been done before—indeed it is literally the only way holidays ever come into existence. But part of their structure seems to be that the more transparent the reasons for choosing that date and those rituals, the more empty and insincere the holiday seems. Once you admit that this is an arbitrary choice meant to converge an equilibrium, it stops seeming like a good choice anymore.

Now, if we could find dates and rituals that really had good reasons behind them, we could probably escape that; but I’m not entirely sure we can. We can use Darwin’s birthday—but why not the first edition publication of On the Origin of Species? And Darwin himself is really that important, but why Sagan Day and not Einstein Day or Niels Bohr Day… and so on? The winter solstice itself is a very powerful choice; its deep astronomical and ecological significance might actually make it a strong enough attractor to defeat all contenders. But what do we do on the winter solstice celebration? What rituals best capture the feelings we are trying to express, and how do we defend those rituals against criticism and competition?

In the long run, I think what usually happens is that people just sort of start doing something, and eventually enough people are doing it that it becomes a tradition. Maybe it always feels awkward and insincere at first. Maybe you have to be prepared for it to change into something radically different as the decades roll on.

This year the winter solstice is on December 21st. I think I’ll be lighting a candle and gazing into the night sky, reflecting on our place in the universe. Unless you’re reading this on Patreon, by the time this goes live, you’ll have missed it; but you can try later, or maybe next year.

In fifty years all the cool kids will be doing it, I’m sure.

Christmas and the economy

JDN2457380 (Dec 23, 2015)

By the time this post officially goes live, it will be two days before Christmas. (As I actually write, the Federal Reserve just ended our zero-lower-bound interest rate policy. I’ll talk about that more in a later post.)

Christmas is one of the most economically significant of holidays. Partly this is because of the fact that there are more Christians than people of any other religion, but mostly it is because Christmas is the most capitalist of holidays, the one that is by now defined primarily by the surge it creates in consumer spending. Yet even this surge is often wildly overstated.

Total Christmas-related spending is over $600 billion per year, almost exactly equal to the US military budget. (Good news, by the way; the US military budget is declining under the Obama administration, approaching—though not yet reaching—a more sensible and sustainable peacetime level.) This is mostly gifts, but cards, decorations and travel are also important parts.

This is a lot of money, but not so much compared to total US consumer spending, which is $6.7 trillion per year. (The Consumer Expenditure Survey tracks this sort of thing with an obsessive level of detail; if you’ve ever wanted to know how much the average 45-54 year-old American spends on eggs each year, now you can.) Thus, about 9% of our spending is Christmas-related, which honestly seems kind of low given than the season now covers approximately 20% of the year.

The best I can figure, the reason Christmas keeps moving back is a competitive pressure: There’s some sort of advantage to being the first business to start your Christmas sales, so each business tries to be earlier than everyone else was last year—with the result that they all keep moving further and further back in the year. Eventually we’ll just start our Christmas shopping on December 26.

The money supply fluctuates seasonally, and often peaks in December; but it also often peaks in March (and I’m honestly not sure why). So once again, Christmas isn’t as important for the economy as many would have you believe. While it may provide some macroeconomic boost, it provides the largest boost when people have lots of extra money to spend, which is we need it the least.

As I wrote about in last year’s Christmas post, many economists believe that much of this spending is inefficient, because they don’t actually understand what gifts are for. Fortunately economists seem to be coming around and seeing why gifts are actually beneficial, though their reasons for this are sometimes dry enough that they don’t make great Christmas cards. (That doesn’t stop some people from saying that you shouldn’t give gifts, and if you give anything you should give cash.)
So no, the economy will not live or die depending on how much people buy at Christmas. While it is the most economically significant holiday, it is still not really all that economically significant.

What I’m more concerned about is the stress that the Christmas season creates in a lot of people. WebMD, the Cleveland Clinic, the Mayo Clinic, and MedicineNet all have articles about the public health damage caused by holiday stress. Death rates actually spike during the holiday season, though the precise reason is unclear—and contrary to rumor it is definitely not suicide. Deaths by heart attack and stroke spike during the holidays, possibly due to lack of medical care.

There are many causes of this stress; not least, I’m sure, is the increased pressure on retail workers. But a lot of it may just be the increased pressure people put on themselves to buy the perfect gift, have the perfect Christmas dinner, not get into a political argument with their racist family members, and so on.

But when we push ourselves so hard to have a perfect holiday, we end up making ourselves miserable. It’s like constantly saying in your head, “Have fun! Why aren’t you having fun!?”

So what I’d like to say to you all is really quite simple: Try to relax. It’s okay if everything doesn’t go perfectly. Happiness is not found in pressuring ourselves to live a perfect life. It is found in appreciating how good our lives already are.

Why we give gifts

JDN 2457020 EST 18:28.

You’ll notice it’s Sunday, not Saturday; I apologize for not actually posting on time this week. Due to the holiday season I was whisked away to family activities in Cleveland, and could not find wifi that was both free and reliable.

But since it is the Christmas season—Christmas Day was last Thursday—the time during which most Americans spend more than we can probably afford buying gifts (the highest rate of consumer spending all year long, much of it on credit cards, a significant boost for the economy in these times of depression), I thought it would be worthwhile to talk about why gifts are so important to us.

As I’ve already mentioned a few posts ago, neoclassical economists are typically baffled by gift-giving, and several have written research papers and books about why Christmas gifts are economically inefficient and should be stopped. Oddly it never seems to occur to them that if this is true, then there is widespread irrational consumer behavior that has nothing to do with government intervention or perverse incentives—which already means neoclassical economic theory is in serious trouble. Nobody forces you to buy gifts, so if it’s such a bad idea but we do it anyway, we must not be rational agents.

But in fact it’s not such a bad idea, and it’s “inefficient” only in a very narrow-minded sense that takes no account of relationships or human emotions. Gifts only make us not “rational agents” in that we are not infinite identical psychopaths. There is in fact nothing irrational about gifts.

Gift-giving is a human universal; it has been with us far longer than money or markets or indeed civilization itself. Everyone from tribal hunter-gatherers to neoclassical economists gives gifts, and in fact most people who descend from populations that lived in higher latitudes (that is, “White people”, though perhaps in a later post I’ll explain why our “race” categories are genetically absurd) actually celebrate some sort of gift-giving ceremony around the time of the Winter Solstice. Many of our Christmas traditions actually come from the Germanic holiday Yule, which is why we say things like “Yuletide greetings” even though that has absolutely nothing to do with Jesus. We celebrate around the Solstice because it was such a momentous season for us, the darkest night of the year; as if the darkness and cold weren’t bad enough by themselves they are the harbinger of the dreaded winter that prevents our crops from growing and may not allow us all to survive. We reaffirm our family ties and promise to help each other through this dangerous time. Music, gifts, and feasting are simply the way that humans organize our celebrations—again this is universal.

What do gifts accomplish that a simple transfer of cash would not? I can think of three things:

      1. Convey closeness: First of all there is of course the fact that by buying someone a gift at all, you are expressing the fact that you care about them and want to be close to them. But the choice of the gift also matters. Your closest friends always buy you the best gifts, because they know you the best. Thus the sort of gift you receive from someone is a measure of how well they know you. Many of us give each other lists of ideas to buy, but I always include more on the list than I expect to receive and encourage people to buy things that are not on the list that they think I might enjoy. A computer program can buy things off a list; the point is that we express our relationships by choosing things we know people want without them having to ask. We trust people to know us well enough to get it right most of the time; they’ll probably make mistakes (most people think they know others better than they actually do), but the mistakes are made up for by the successes. The disappointment in getting something you didn’t want isn’t even so much in the thing as it is in the fear that your loved ones don’t know you as well as you thought they did; this is why I consider it important to express—gently and tactfully of course—when you really don’t like a gift you received; you want them to know you better and do better next time, not keep giving you things you hate while you brood behind fake smiles. What you choose to buy conveys what you know and how you feel; this is why the best gift is one you love to have but didn’t ask for. That’s why I’m honestly more excited about my new travel pillow and copy of Randall Monroe’s What If? than I am about my new Bluetooth headset; of course the headset is more expensive and more useful, but I specifically asked for it. My sister and my mother knew me well enough that the book and the travel pillow I didn’t have to ask for.
      2. Grant permission to indulge: This is particularly important in the United States, because our society has Puritanical roots that make us suspicious of any activity that isn’t directly linked to productive efficiency. Honestly when those economists criticize Christmas as “inefficient” they are not so much making a serious economic argument as they are expressing in terms familiar to them the centuries-old Puritanical norm. It is considered unseemly to buy things for yourself that are purely for fun, particularly if they are expensive. You are expected to buy only the minimum you need, because any more is greedy; the notion seems to be that there is only so much stuff to go around, and if you take more others will have less. (This could scarcely be further from the truth; your frivolous consumer purchases can save children from starvation by giving their parents jobs in factories.) Neoclassical economists often think they are immune to this sort of norm, but aside from their discomfort with Christmas, the sense of righteousness they often have around “raising the savings rate” says otherwise. The link from savings to investment is tenuous at best, but one thing saving definitely does do is prevent you from spending indulgently. But since buying things that make us happy is actually kind of the entire point of having an economy in the first place, it is necessary to find workarounds for this oppressive ethic. One solution is gifts; to give someone else an indulgent gift allows them to engage in indulgent activities, while preserving their own status as someone who wouldn’t normally waste money in that way, and since you are not the one indulging you can hardly be accused of frivolity either. This is also what gift cards accomplish; in economic terms gift cards seem weird, because they are at best as good as cash, and often far worse. But gift cards are typically for retail stores where it is hard to buy something that’s not indulgent, thus offering permission to indulge. This is why a gift card for GameStop or Dick’s Sporting Goods makes sense, but a gift card to Walmart or Kroger seems odd. This is also why receiving cash or an Amazon gift card doesn’t feel as good; since you can buy just about anything, the social norm toward spending responsibly returns. (Never buy anyone a VISA gift card; it’s basically the same as cash except you’re giving some of the money to VISA.)
      3. Conveys your own status: By buying expensive things for other people, you raise your own reputation as an individual. This one is easy to become cynical about, so it’s important to be clear what it actually means. Conveying your own status doesn’t necessarily mean arrogantly domineering over other people. It certainly can mean that, which is why if your cousin has $20 million and buys everyone in the family a new car every year, you’d honestly not be that thrilled about it; yeah, it’s nice getting a new car, but your cousin is clearly showboating his superior wealth and trying to make everyone else look cheap and/or poor. But there is a way to elevate your own status without downgrading everyone else’s, and truly generous gifts are a way of doing that. If the things you buy are really things your loved ones truly need, then you express your generosity and love for them by buying more than you can easily afford. Philanthropy is also a means of conveying status, and again comes in both forms. When Carnegie built buildings and named them after himself, he was being arrogant and domineering. When Bill Gates established a foundation to combat malaria and poverty in Africa, he was being genuinely generous. This kind of status is always a bit paradoxical: The best way to earn a reputation as a good person is to honestly try to help people and have little concern for your own reputation; people who try too hard to improve their own reputations just end up seeming arrogant and narcissistic. In order to deserve status, it is necessary not to directly seek it. The clearest example here is Jonas Salk: He invented a vaccine that saved the lives of thousands of children, making him more deserving of a billion dollars than anyone else I can think of. And he had a chance at a billion dollars, but he specifically gave it up, because in order to get it he would have had to enforce a patent that would raise the price of the vaccine and allow children to needlessly suffer and die. It was the very character that made him deserve the wealth that caused him to refuse it. The only way to hit the target is to aim much higher.

If you really want to insist, yes, there’s also some sort of net transfer of wealth involved in gift-giving, because it is expected that the richer you are the more you’ll spend on gifts. But that’s a very small part; even in hunter-gather societies that have negligible levels of inequality human beings still give each other gifts. Gifts are a part of us; they are written in the language of life itself upon the ancient thread that binds us to our ancestors and makes us who we are—by which I mean, of course, DNA. We could probably no more stop giving gifts than we could stop feeling love.