Friday, February 18, 2011

Market Efficiency

In an interesting book, Scroogenomics, the author Joel Waldfogel makes an argument that Christmas is a dead-weight loss. By that I mean that for those receiving a Christmas gift, what they would be willing to pay for their gifts is less than what the actual cost of the gifts they received. Thus the dead-weight loss. Thus from the individuals perspective - on their own - would not have bought those gifts and chosen to do something else with the money.

So, Waldfogel makes a suggestion. Why not just give the money to a charity, typically one that is non-profit that tries to increase the welfare (economic well-being). Here is a great example of such an attempt in the real world.

OK, but what if I do not know which charity is worthy? Now there is literally an app for that. Shoppers can shop as normal, and the stores that they shop at will give to the charity, which is not exactly what Waldfogel is arguing, but is a rather interesting variation on his idea.

No comments: