the economy of birthdays

a common phenomenon in singapore is that people like to collect money from a group of friends to buy birthday presents for individuals.

suppose we start on a basis of assumption that in a group of friends, say A, B, C, D, E; the presents bought for each individuals during their respective birthdays are similar. for this case, let A be the birthday person and B, C, D and E collected money to buy a present for A

we acknowledge that the presents' value is equal to the value of the money collected is $(B+C+D+E), assuming there is no loss in value from the transfer of money to present.

if each person's present is similar in value, it should be equal to value present(A). therefore, Present(A)=present(B)=presentC)=present(D)=present(E).

assuming that each person in the group give equivalent amount to buy for any of the presents. meaning each present will be the value of present(A)/4.

for each birthdays, the value of present(A)/4 is given to buy presents. that would be a dollar value of $present(A) for the whole year [present(A)/4 * 4].

the present received by each individual will be equal to present(A). [since present(A)=present(B)=present(C)....etc]

therefore, the value given out and the value received is the same each year.

in the process of buying presents for others, there are deadweight losses such as energy, time, effort to think of something, sms-es to organize, quarrels from divergence of opinions etc. we let the value of these losses represented by value(losses).

so the total welfare is present(A)-value(losses).

but if everybody stop buying presents for each other, and each individual just go and buy a present for themselves for the value of present(A) at their respective birthdays each year, the value spent will be $present(A), which is less than the current phenomenon, which is present(A)-value(losses)!!!!!!!

So, everybody should just stop buying presents for their friends and just buy themselves something each year!!!!!!!!!

okay, even if you argue that there are goodness from it, such as gratefulness, thanksgiving, the fellowship values, and we denote these values as value(goodness). i contend that value(goodness) is just equal to value(losses). so there is no overall gain. don't forget, there are usually a lot of chances, that presents bought are not used by the receiver due to a bad fit or taste preference.

and often, there are a lot of inequality created due to unequal value in presents, and bad choice of presents etc. therefore, the whole society's consumer surplus is transfered to producer surplus, and that contributes to a greater rich poor parity.

so overall value of the society is less than desired if you think about it rationally.