How might opposing schools of economic thought – from neoclassical and Keynesian to Libertarian and Marxist, view Christmas presents? Levity aside, the answer reveals the pompousness and vacuity of each and every economic theory.
ATHENS – To welcome the New Year with a cheeky take on the clash of economic ideologies, how might opposing camps’ representatives view Christmas presents? Levity aside, the answer reveals the pompousness and vacuity of each and every economic theory:
Neoclassicists: Given their view of individuals as utility-maximizing algorithms, and their obsession with a paradigm of purely utility-driven transactions, neoclassical economists can see no point in such a fundamentally inefficient form of exchange as Christmas gift-giving. When Jill receives a present from Jack that cost him $X, but which gives her less utility than she would gain from commodity Y, which retails for $Y (that is less than or equal to $X), Jill is forced either to accept this utility loss or to undertake the costly and usually imperfect business of exchanging Jack’s gift for Y. Either way, there is a deadweight loss involved.
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