Mmm, our first Christmas as a married couple.
Oh, this is so romantic.
I think you're really going to like this.
Hello, my friends.
Aah! No, I hate it!
Oh. Hi, Rhea.
Hey, guys. I am so sorry.
Adam, just get on with it.
Wait, is he teaching you something?
Oh, no.
We're the examples this time.
First, let's define economic value.
I'd rather drown.
The value of an object is the maximum amount
that its owner would be willing to pay for it,
or simply put, how much it's worth to you.
Add all these amounts together,
and that's the total value
of everything you've bought.
Ohh!
cardboard cutout of The Rock
is worth a hundred bucks to you.
Oh, yeah.
But I only paid 50 for it.
Well, it it's worth a hundred to you
and you only paid 50,
then in economic terms, when you bought it,
you literally created $50 in value.
You're 50 bucks richer.
Oh, I feel wealthy.
(gasps) Let's go to Vegas.
Gee, Adam, thanks for this lesson
in basic economics,
but what does this have to do with gift-giving?
(man) A whole lot, actually.
Oh, who is that coming down the chimney?
Santa? It's Santa.
I knew he was real.
Nope, it's economist Joel Waldfogel.
Wow, way less exciting.
Hey, Adam.
Hey, Joel.
Would you mind explaining to my sister Rhea
what the economic problem with gift-giving is?
Sure. When we buy gifts,
we do so with the best of intentions,
but while we're really good at knowing what we like,
we're pretty terrible at guessing
what other people would value.
Oh, this is great.
What? What's wrong?
Well, usually I wear wrestling tank tops
so I can show off my jacked triceps,
but it's the thought that counts.
Not economically.
Emily, how much would you pay for this shirt?
I'll wear it to bed, so I guess, like,
I don't know, 15 bucks.
I paid 50.
(Joel) Well, Murph, you just destroyed
$35 worth of value.
He might as well have set it on fire.
No. No, no, no, no!