IF Joel Waldfogel is correct, the Three Wise Men were just the sort of people who should not have bought Christmas presents.
Waldfogel is an economist who in 1993 carried out a seminal study among undergraduates at Yale University and, more recently, wrote a book called Scroogenomics. The point of both was to demonstrate the “deadweight loss” of Christmas gift-giving: that is, the extent to which exchanging presents is economically inefficient.
In the survey, students were asked to detail the gifts they received, estimating their cost and then calculating what they themselves considered the gifts’ value – or “utility”, in economists’ terms. The difference was generally negative, by between 10 and 33 per cent. Which, projected on the US at large, implied a deadweight loss in Christmas presents of multiple billions.
“Social distance” was a big determinant in whether presents were well-chosen. Not surprisingly, the choices of close friends and “significant others” proved highly efficient. Parents scored well too. But as the circle widened to aunts, uncles, grandparents and – worst of all – in-laws, the inefficiency grew, until one-third of a present’s retail value was destroyed in the very act of giving.
The Three Wise Men may not, strictly speaking, fit the survey’s model. They weren’t the extended family of Joseph and Mary, or even friends. And their gold, frankincense, and myrrh – though retrospectively defined as Christmas presents – were in the first place a response to maternity.
Even so, the magi’s distance from the recipients, social and geographic, was great. And in the interest of conferring maximum utility, they were exactly the sort of people who should have played it safe and given vouchers or cash.
The man who brought gold was at least on the right track. But one of the big risks of uninformed present buying – duplication – is illustrated by the other two. Myrrh is described by dictionaries as a "bitter, aromatic gum from trees of the genus commiphora", while frankincense is a "gum resin from the tree species boswellia".
So at best, it must be suspected that the wise men’s combined choices did not achieve optimal efficiency. At worst, one imagines the infant’s mother receiving the presents with a forced smile. “How lovely,” she might have said; “I’ll put them over here with the rest of the aromatic gum products”.
DESPITE THE TITLE, the young couple in O Henry's famous story The Gift of the Magioccupy the other extreme of the present-giving spectrum. Henry's work is, in general, far removed from economics treatises. Which said, the word "economy" does often feature in comments on his writing style, otherwise notable for its optimism and surprise plot-twists. So adept was he at the latter technique that, in time, the "O Henry ending" became a generic term.
O Henry – real name William Sydney Porter – died 100 years ago last June, incidentally. And to some extent his life-story imitated his art, being both interesting to read, and short. He worked in a bank for a period, was suspected of embezzlement, went on the run in central America (where he is credited with inventing the term “banana republic”) and eventually returned to serve time.
Among the explanations for his pseudonym is that it was drawn from a sequence of letters in the name “Ohio Penitentiary”, his home for three years. Where his life differed from an O Henry story, however, was its lack of a surprise ending. He drank heavily, like many writers, and died from cirrhosis of the liver and complications, aged 47.
In The Gift of the Magi,he describes young lovers fallen on hard times – their income has been reduced from $30 a week to $20 – who nevertheless want to give each other the perfect Christmas present. Despairing of the miserable savings she has scrimped, Della sells her hair to a wig-maker so that she can buy Jim a platinum fob chain for his proudest possession, a gold watch inherited from his grandfather.
Then Jim comes home on Christmas Eve and is rendered temporarily speechless by the sight of her close-cropped head. Not because he was unduly attached to her hair – beautiful as it was – but because he has just bought her the set of ornamental combs for which she had hankered, having sold his watch to raise the money.
The story has renewed resonance at Christmas 2010, especially here in Ireland, where pay reductions are now commonplace (and where economists have developed an unprecedented interest in haircuts). As with Della's tresses, we too can at least hope for a return to modest growth soon; although Jim's income is another matter. Who knows when we will be able to redeem the family heirloom from the IMF pawnbrokers? But, getting back to Waldfogel's study, The Gift of the Magihas mixed messages. Perhaps unwittingly, O Henry has presented an economic paradox in which the parties studied, despite being optimally informed about each other's consumer preferences, somehow manage to confer minimal utility: the deadweight loss of their presents – in the short-term – amounting to 100 per cent.
Of course, in keeping with his usual approach, O Henry did not see it like this. He preferred the conclusion that, in their star-crossed present choices, the couple had proven their love for each other, which was what mattered most. “Of all who give and receive gifts, such as they are wisest,” he wrote. “They are the Magi.” A message that, by the way, also underlies a more hackneyed phrase much used at this time of year: it’s the thought that counts.