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The Greatest Gift of All (Economically Speaking)

Dec. 23 (Bloomberg) -- In January 1993, Joel Waldfogel asked 86 undergraduate students whether they liked their Christmas gifts. But Waldfogel is an economist, so he phrased the question more precisely, asking them how much they would’ve paid to buy those items for themselves.

The results were grim, at least for the gift-givers: The students estimated that their gifts had cost $438.20 -- but they said the most they would have been willing to pay for them was $313.40. Two months later, Waldfogel rounded up 58 more students and asked them how much cash it would have taken to make them “indifferent between the gift and the cash.” These students estimated that their holiday gifts had cost $508.90 on average. But they would’ve been just as happy with $462.10 in cash.