Archives: Reg Murphy Pubs

Ah, Christmas Eve! Tis the season for lights, music, laughter, joy, and economists’ grinchy discussions of the inefficiency of gift giving. In 1993, Joel Waldfogel published an article called “The Deadweight Loss of Christmas.” In it, he argues that gift-giving is inefficient because gift givers often pay more for the gift than it is worth to its recipient. The better the giver knows the receiver, the more likely they are to give something of higher value to the recipient, and the more efficient gift giving becomes. But, Waldfogel uses survey data to show that Christmas gift-giving “destroys between 10 percent and a third of the value of gifts.”

By Waldfogel’s logic, my parents’ early Christmas surprise to me this year was so close to perfectly efficient that it was, in fact, perfectly inefficient.

Here’s the story:

This year, I took advantage of Black Friday sales to buy myself a large tool I have been wanting for several months. To my surprise, when the shipping company called to arrange delivery, they announced they had TWO of this same item to deliver to my address. It turns out, my parents had purchased the same tool for me as an early Christmas gift!

Perfectly efficient—I was obviously willing to pay exactly what my parents paid for the gift. Perfectly inefficient—I didn’t need two. But, after a very inefficient hour on the phone with the original shipper and the shipping company, the problem was solved. One shipment was returned, and the other was delivered to my house, a very thoughtful and almost perfectly efficient Christmas gift.

Waldfogel argues my parents would have eliminated all inefficiency by giving me the cash they spent on the tool rather than the tool itself. Cash is always worth to the recipient exactly what it costs the giver.

Waldfogel’s work makes great sense theoretically, but it was not without controversy. In fact, it sparked over a decade of debate in Economics journals about how to measure the efficiency of gift giving and whether Waldfogel’s estimates were too pessimistic. My favorite articles from among the critiques of Waldfogel are those that find the value of the gift to the receiver may sometimes be higher than the price paid by the giver. There is a good, theoretical explanation for this, in the case where the receiver just hasn’t yet bought for themselves an item they value greater than the market price.

But, my experience this Christmas has brought up for me another explanation, one that is not well-explored in the economics literature.

I believe simply receiving something as a gift has the potential to increase the value of that item to the receiver. Most of us probably own things we would never have bought for ourselves but that we wouldn’t dream of giving away simply because of who gave it to us. I call this the warm glow of receiving.

Economist James Andreoni coined the term “warm glow” in reference to the satisfaction a gift giver gets from their act of altruism. His life’s work was to show there is economic rationality in altruistic preferences.

I believe a similar warm glow is felt by the receiver of an altruistic act. Some might call it sentimentality. Others might view it as confirmation of a social status. I believe it is the value we place on being thought about, appreciated, loved, seen. Economists have spent decades measuring the warm glow of giving. We have paid far less attention to the quiet but real satisfaction of receiving a gift that says: I see you.

That warm glow adds value back into a transaction that otherwise may seem inefficient. The hour I spent on the phone correcting our blunder is nothing compared to the joy of knowing my parents saw and so perfectly met my need for that tool.

I pray that you and your family will be surrounded by the warmest of glows as you give and receive this holiday season. Merry Christmas!

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Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu. The views expressed in this article are those of the author and do not necessarily represent those of the College of Coastal Georgia.

This week’s topic chose itself. I wanted to use this space this week to present a profile of our local population who are eligible for or recipients of the federal Supplemental Nutrition Assistance Program. But, when I started looking for data, I was met over and over with blank screens or notices that data were not available due to the ongoing government shutdown.

So, let’s pivot and try to answer some of the questions this brings up about data collection and accessibility. Why does a government shutdown affect availability of data, and why does it matter? Why do we rely on the government to collect and distribute data?

First, why does a shutdown affect availability of data? The short answer is pretty simple. Federal agencies collect enormous amounts of data on U.S. households, firms, programs, and markets.

The U.S. Federal Statistical System consists of 13 Principal Statistical Agencies (PSAs), 3 statistical units within other agencies, and over 100 additional agencies, units, or programs that engage in statistical work. These entities are tasked with collecting and analyzing data and making those data available to stakeholders, often including the general public and little-known economists trying to piece together relevant columns for their local newspaper. When these agencies are shut down, data collection, processing, and/or reporting stops. Even older, existing data may become unavailable if a website goes down and federal IT employees are not at work to fix it.

Why does it matter? The types of data collected by federal agencies are essential for policymaking at the federal, state, and local level and for both public and private organizations. The largest PSA is the US Census Bureau. In addition to fulfilling the Constitutional obligation of counting every U.S. resident every 10 years, the Census Bureau, whose mission is “to serve as the nation’s leading provider of quality data about its people and economy,” more frequently collects American demographic and housing data, public and private employment data, and business production data. The Census Bureau’s databases are the first place I would look for information about Coastal Georgia’s SNAP recipients.

Other PSAs whose work is oft cited include the Bureau of Labor Statistics (unemployment, inflation, etc.), the National Center for Education Statistics (school performance and student outcomes), the National Center for Health Statistics (CDC data), and the Bureau of Economic Analysis (GDP).

Without the work of the U.S. Federal Statistical System, lawmakers and enforcement agencies are essentially flying blind. They do not know whom they are serving nor whether their efforts are working to achieve policy goals.

Last, the question every good economist should ask. Why is the government, rather than a private entity, responsible for all this data collection? This answer basically comes down to access and motivation. Wells Fargo economist Nicole Cervi told the economic news show Marketplace that even as large as Wells Fargo is, their organization does not have access to a sample of businesses or consumers that would accurately represent all of America. The Federal Statistical System has access to a larger, more diverse, and ultimately more representative sample of Americans than any private entity does. And absent the profit motive that exists in private sector, government agencies, in theory, are less likely to be tempted to skew findings or distort a narrative for personal gain. The motivation of federally employed scientists, social scientists, and statisticians is simply to uncover and report the truth. Though the impartiality of government data has been called into question from time to time in the presence of partisan pressures, a majority of Americans still say they trust data from the U.S. Federal Statistical System and believe it to be a necessary part of the policymaking process.

As the federal government reopens this week, so too does the flow of data that helps us understand our communities and shape effective policy. In an era of growing political polarization, the recent shutdown serves as a reminder of how vital it is to safeguard the integrity of government data collection, analysis, and dissemination—for the sake of transparency, accountability, and informed decision-making.

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Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu. The views expressed in this article are those of the author and do not necessarily represent those of the College of Coastal Georgia.

Eight years ago this month, The Murphy Center started this weekly column. The first article I wrote for publication in The Brunswick News was titled “Economic development requires involving the community.” A recent international news story reminded me of a personal experience that has deeply shaped my belief in doing development right, which still means the same thing it did 8 years ago— consider and involve as many community stakeholders as possible.

The news story was about the African Union’s endorsement of efforts to stop governments’ and international organizations’ use of the Mercator map of the world.

The Mercator Map, named for the Flemish cartographer who created it in 1569, features parallel lines of longitude, and lines of latitude that are parallel but spaced wider and wider as they diverge from the equator. The Mercator map was popular with early navigators because its design allowed them to preserve angles when plotting a course. The maps’ popularity spread into classrooms and to other uses, and these maps have been some of the most widely used world maps for centuries.

There is no perfect map. It is impossible to represent our round Earth as a flat map without some distortion. But there are different methods of translating round to flat, each with merits and drawbacks.

Unfortunately, when you build a map the way Mercator did, you stretch features near the Earth’s poles and shrink features nearer the Equator. Thus, while the map may be useful for navigation, it is essentially useless for understanding what the Earth really looks like. One alternative, preferred by the African Union, is the Equal Earth Projection map, which better reflects countries’ true sizes.

And it matters. I learned first-hand how much it matters when I was a graduate student interning in West Africa.

I was living in the rural town of Saclepea, Liberia, with a small team conducting research to inform our American organization’s economic development efforts in the area. One of our team members brought with them a load of supplies donated by charitable Americans. Among these supplies were paper maps intended for distribution in Saclepea’s schools.

One of our school-aged Liberian friends found the maps among our things before we distributed them, and as he examined the map of the world, he commented, “No wonder Africa will never be great. Look how much smaller we are than America.”

His words hit hard. I knew this perception was far from the truth. In fact, approximately 30 world countries, including big ones like the U.S., China, and India, could fit inside the continent of Africa. But I had never considered how common maps distorted Earth’s proportions nor how those distortions affected the belief systems of children around the world.

I advocated that my team not distribute these maps. It had become clear to me that they negatively shaped the lens through which children view themselves in relation to the rest of the world. Surely, the good people who donated the maps had been just as ignorant as I about their potential negative effects. Nevertheless, my team leader rebuked me and insisted that we must distribute the maps to honor the Americans who had worked hard to secure them for Liberian schools. It was the wrong move. It was a classic example of what Atlanta minister Bob Lupton would call “toxic charity” or what Development Economists Steve Corbett and Brian Fikkert warn against in their book When Helping Hurts.

That experience started my low-key map obsession, and still, it shapes how I think about, teach, and participate in economic development. I have non-Mercator maps in my office and at home as reminders that true and lasting economic development must always put the needs of the communities being served above the desires of those serving.

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Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu. The views expressed in this article are those of the author and do not necessarily represent those of the College of Coastal Georgia.