It’s Phil’s 50th birthday and Jay decides to try and sneak a gift to Phill that Cam had given him before. What Jay doesn’t realize is that Cam had inscribed the front cover and as Phil begins to red the inscription, Cam recognizes it is the same book that he gave Jay before. Giving gifts can be seen as wasteful if the giver doesn’t fully know the recipients preferences and willingness to pay. The entire family tends to give each other gifts that the others don’t always want, but this time Jay didn’t even take the time to open the book in the first place.
See more: deadweight loss, exchange, gift giving, inefficiency, irrationality, self interest, subjective value
Cam and Mitch are having a nice breakfast with Jay, but it turns out jay only invites them to breakfast because he has to meet a club minimum in order to keep his membership. We learn that Jay also buys people gifts from the club shop so that he can help his balance and even offers to get Cam and Mitch some spa services. This incentive mechanism by the club ensures that people aren’t just joining the club for the golf perks, which have relatively low profit margins.
See more: altruism, gift giving, incentives, self interest
Cam and Mitch have decided to get Jay and Gloria a special gift for Gloria’s impending birth. Jay and Gloria have both created a registry of gifts they would like, but Cam has decided to go “off registry” because he believes Jay and Gloria don’t really know what they want. Mitch seems concerned that they will not appreciate it.
One of the issues with gift giving is that the parties have imperfect information about what the other will value the gift at. Economists love to focus on the inefficiency of gift giving and often suggest just exchanging money.
See more: altruism, gift giving, imperfect information, irrationality, rationality
It is Phil’s birthday and also the day the iPad is being released. Phil is willing to spend his birthday waiting in line to be sure he gets the new iPad, but Claire offers to do it for him. Instead of getting there early, she ends up falling asleep on the couch. When she finally gets to the store, they are all out, and Phil ends up wishing he had handled it himself.
See more: costs, demand, early adopters, gift giving, innovation, nonpecuniary benefits, preferences, tastes and preferences, technological change, technology
Phil has plans to give Haley the perfect git for her 21st birthday – a new car. He has spent months doing research and planning without actually going in to a dealership. His work has been online and he landed an incredible deal. But Jay is convinced that he can do better. In this scene, Phil is sad because Jay made his deal fall through but Jay has a surprise. Jay did some hard core negotiating and beat that unbeatable deal…. or did he? Buying a car is different from many other markets. The price on the sticker is rarely what people pay. Instead, both buyer and seller go in to the transaction with the understanding that they will negotiate the price and features of the car.
See more: bargaining power, economic signals, gift giving, imperfect competition, negotiations, prices, self interest
Jay got new glasses that make him look like an old man but they work really well. So well that he realizes that Gloria’s family members in Columbia are wearing his old clothes. Notice that Gloria says that they sometimes send the clothes back. In the US, people frequently donate clothing to people in less developed countries. Many economists argue that this is counterproductive and leads to a surplus of clothing in these countries. That surplus can hurt markets and cost jobs.
See more: charity, donations, efficiency, emerging markets, gift giving, growth, interdependent utility functions, preferences, utility
The Dunphy’s call Phil’s parents in the sweaters they were given as gifts. The call goes awry when Claire sees what looks like a cigarette burn in the sofa. In her anger she calls the sweaters ugly while still on the phone with Phil’s dad. One of the issues with gift giving is that the receivers wouldn’t purchase the items they receive for the same price that the buyers paid for the item. On top of the inefficiency from an exchange point of view, there are psychic costs associated with acting like you enjoy the gift as well.
See more: altruism, gift giving, irrationality, preferences, rationality
Phil surprises Claire with a new bracelet for their anniversary and Claire reciprocates with coupons for 5 free hugs, which Phil points out are usually free already. Claire is proud of her gift because Phil never wants anything, but Phil can list off many things he would like. Gift giving can be inefficient if it’s the two givers aren’t fully aware of the others’ preferences.
See more: coupons, exchange, gift giving, inefficiency, irrationality, medium of exchange, preferences, store of value, unit of account, wants
Cam gives his mother in-law a pair of diamond earrings, but she reciprocates by giving him exercise equipment and salad drier. Cam doesn’t appear to think that the two gifts were of equal value, which shows how gift giving can be considered inefficient.
See more: deadweight loss, exchange, gift giving, inefficiency, irrationality
Cam and Mitch went on vacation to celebrate their Honeymoon and brought back “gifts” to the family. Mitchell claims to have gotten sick because he wore socks on the beach, but his virus spread to the entire family. Each member goes through the pain they endured because Mitch didn’t quarantine himself. Only later in the episode do they find out that Mitch wasn’t even patient zero.
See more: externalities, gift giving, health care, negative externalities, private benefits, social costs, substitutes
Cam and Mitch went on vacation to celebrate their Honeymoon and brought back gifts to the family. For Jay, they brought a cheesy golfing frog statue, but also with an illness. Jay views the frog statue so poorly that considers it possible the illness is a better gift. Economists like to discuss irrationality of gift giving because we often spend money on gifts for people at a higher value than they would spend on themselves. A second concept at play in the clip is that Cam & Mitch’s trip to Mexico added additional costs on the family through the spread of an illness. Had Mitchell known he would have gotten the family sick, he may not have left.
See more: exchange, externalities, gift giving, inefficiency, irrationality, negative externalities, subjective value
It’s time for Jay and Gloria to exchange gifts and Jay is anxious about his gift from his wife. He struggles finding the right gift because it always seems like a competition. If the two didn’t exchange gifts then the extra psychic costs wouldn’t exist. It turns out that Gloria actually really loves Jay’s gift, but Jay really wanted that watch.
See more: gift giving, inefficiency, irrationality, psychic costs, subjective value
Cam and Mitch have been married 3 months, but it seems like their honeymoon will never end. Cam continues to give Mitchell flowers even though he clearly doesn’t enjoy them as much as he used to. He may have loved the first bouquet, but eventually he may start to hate them.
See more: diminishing marginal returns, gift giving, inefficiency, preferences, rationality, utility