When economists comment on holiday gift-giving, it is usually to condone the healthy effect of spending on the macroeconomy. However, an important feature of gift-giving is that consumption choices are made by someone other than the final consumer. A potentially important microeconomic aspect of gift-giving is that gifts may be mismatched with the recipients' preferences. In the standard microeconomic framework of consumer choice, the best a gift-giver can do with, say, $10 is to duplicate the choice that the recipient would have made. While it is possible for a giver to choose a gift which the recipient ultimately values above its price-for example, if the recipient is not perfectly informed-it is more likely that the gift will leave the recipient worse off than if she had made her own consumption choice with an equal amount of cash. In short, gift-giving is a potential source of deadweight loss. This paper gives estimates of the deadweight loss of holiday gift-giving based on surveys given to Yale undergraduates.' I find that holiday gift-giving destroys between 10 percent and a third of the value of gifts. While these recipients may be unrepresentative of the U.S. population, their gifts are not necessarily unrepresentative. Holiday expenditures average $40 billion per year, implying that a conservative estimate of the deadweight loss of Christmas' is a tenth as large as estimates of the deadweight loss of income taxation. I also explore how deadweight loss and the tendency to give cash gifts vary with the relationship and age difference between giver and recipient. I find that gifts from friends and significant others are most efficient, while noncash gifts from members of the extended family are least efficient and destroy a third of their value. I develop a simple expected-utility model to explain the decision to give cash, as opposed to in-kind gifts. The data are consistent with the model: cash gifts are most common from the sorts of givers whose noncash gifts have the lowest expected value to recipients (given their cost) and high variability in recipient valuation.

We estimate a spatial model of liquor demand to analyze the impact of government-controlled retailing on entry patterns. In the absence of the Pennsylvania Liquor Control Board, the state would have roughly 2.5 times the current number of stores, higher consumer surplus, and lower payments to liquor store employees. With just over half the number of stores that would maximize welfare, the government system is instead best rationalized as profit maximization with profit sharing. Government operation mitigates, but does not eliminate, free entry's bias against rural consumers. We find only limited evidence of political influence on entry.

In the past decade Americans have increasingly turned their attention to nonlocal information sources, raising concerns about disengagement from local communities. Regulation sometimes seeks to curtail the integration of media markets through the promotion of “localism.” This paper examines the role of local media. We make use of the rapid growth of Hispanic communities in the United States to test whether the presence of local television news affects local civic behavior. We find that Hispanic voter turnout increased by 5 to 10 percentage points, relative to non-Hispanic turnout, in markets where Spanish-language local television news became available.

Digitization has led to many new creative products, straining the capacity of professional critics and consumers. Yet, the digitization of retailing has also delivered new crowd-based sources of pre-purchase information. We compare the relative impacts of professional critics and crowd-based Amazon star ratings on consumer welfare in book publishing. Using various fixed effects and discontinuity-based empirical strategies, we estimate their causal impacts on sales. We use these causal estimates to calibrate a structural demand model. The aggregate effect of star ratings on consumer surplus is, in our baseline estimates, more than ten times the effect of traditional review outlets.

The 44 Liquormart decision, eliminating Rhode Island's ban on liquor price advertising, made Rhode Island the subject of a natural experiment for measuring the effect of advertising on prices. Using Massachusetts prices as controls, we find that advertising stores substantially cut only prices of the products that they advertise. Prices of other products, at both advertising and nonadvertising stores, do not change. Advertising stores cut their prices on products advertised by rivals, while nonadvertising stores do not. We find no reductions in price dispersion across stores. Newspaper-advertising stores appear to draw a higher share of customers after they advertise.

Recent technological advances have dramatically lowered the cost of transmitting information over large distances. In the late 1990s, the New York Times implemented a national distribution strategy, expanding delivery in over 100 cities. Using cross-sectional and longitudinal data on local newspaper circulation, Times penetration, and local newspapers characteristics, we find that as Times circulation grows in a market, local newspaper circulation declines among college-educated readers. Local newspapers reposition toward local and away from national coverage, raising circulation among individuals without a degree. Availability of national newspapers in local markets changes the relationship between local preferences and local products.