After completing this lesson, you will be able to:
- Describe how cash gifts can provide more utility than gifts in kind
- Understand how gifts affect recipients’ well-being
- Summarize how gift-giving may be a form of signaling
Multiple scenes from the show can be used to show the deadweight loss associated with gift giving. While many of the characters on the show known each other, and some have even dated, it’s not always clear that people can perfectly predict the impact of a gift on their recipient’s utility. Extensions of the subject can be applied to public policy decisions (cash versus transfer payments) or behavioral economics (signaling).
In the scene below, various employees notice that their lockers have been broken into. Dina has done this in an effort to impress them by placing gifts in their lockers. Dina is not the best at gift giving, and some of the gifts are offensive.
Ask students to think back to the last time they received a collection of gifts, perhaps from Christmas or a birthday. Have them estimate the dollar value of the gifts they received. Next, ask students to estimate the dollar value they would place on those gifts if they had to buy them on their own. Have the students report the difference between the two values.
Measuring deadweight loss associated with gift giving often focuses on the recipient side. Someone giving a gift may hope to purchase a gift that exactly matches the recipient’s willingness to pay, but it often is below that value. Have students reevaluate their lists of gifts and ask if there are any opportunity costs associated with those gifts?
If they receive they wrong size, there may be time associated with returning the gift. Others may have received gifts that are embarrassing to friends and families who visit. For some students, receiving cash can result in avoiding these costs.
A second scene in Superstore actually illustrates this exact exchange:
While Dina may have preferred cash, why might Cheyenne have wanted to give a gift. What information do gift givers want to portray when giving gifts to friends? Why is that information not present when someone gives cash as a gift? These questions could be posed in a group discussion or as part of an exit ticket assessment.