The biologist Leslie Orgel once said, “Evolution is cleverer than you are.” This statement is taken as having two implications. First, if you can’t conceive of how some biological system might have developed by means of evolution and natural selection, that doesn’t provide any reason to believe such a system could not have evolved – it only shows the limits of your understanding and imagination. Second, as this remembrance of Orgel put it, “evolution is a better ‘designer’ than any so-called ‘intelligent designer.’ The twists and turns of evolution are difficult to predict, let alone outwit.”

This quip by Orgel also neatly summarizes the thinking behind the historical empiricism that Yoram Hazony associates with conservatism, and is also found in the thought of liberal thinkers like F. A. Hayek. In this line of thought, historical experience and social evolution are cleverer than you. Demonstrated experience is more reliable than abstract reason – and if the institutions developed through experience don’t seem to make sense by your use of reason, that most likely only shows the limits of your understanding – it doesn’t provide a reason to think those institutions are without value. Arnold Kling points out that this can be applied to even something as universally disliked as bureaucracy: 

Bureaucracy was not imposed on humanity just to perpetrate evil. It solves some problems, particularly in capital-intensive firms. In government and non-profits, it can be a tool to hold individuals accountable; otherwise, because there is no profit-and-loss system, there would be no accountability at all.

This is not to deny the problems with bureaucracy. It is not to suggest that it is the best solution for preventing major errors. But there is a Chesterton’s Fence argument for not simply abolishing bureaucracy. Getting rid of bureaucracy is not a shortcut to utopia.

But if a defense of bureaucracy isn’t to your liking, perhaps a defense of gift-giving might be more welcome? Tis the season, after all. 

You might be wondering why something like Christmas presents needs defending – who could possibly be against it? Well, the economist Joel Waldfogel, in his book Scroogenomics, makes a case against gifts. Very briefly, gift-giving is bad because we are bad at understanding what other people value and how much they value it. When buying for myself, I won’t spend $100 on anything that I don’t value at $100 or more. But I might spend $100 buying a gift the recipient only values at $20 – or that the recipient might actively dislike, and negatively value. When I buy myself a widget for $100 that I would have been willing to pay upwards of $150 to acquire, I’ve become $50 wealthier. If I buy someone else that same widget, but they only value it at $20, that represents $80 in lost wealth. If I had just given them $100, they might have purchased their own preferred brand of widget that they valued at $150. By giving the recipient cash, $50 in new wealth might have been created, but by giving them a gift, $80 in existing wealth is lost. Waldfogel argues that gift-giving leads to tens of billions of dollars of wealth lost every year for just this reason. It makes no rational sense, and we’d be better off without it. 

That line of thinking represents the rationalist approach. Waldfogel assumes gifting, in order to be justified, must be deliberately aimed at achieving a specified end. Then, applying his reason, he shows that using a reasonable model with various plausible assumptions, gifting fails to achieve the particular end he specifies for it. Therefore, we’d be better off without it, QED. A rebuttal, motivated by a more evolutionarily-informed approach, was published in the Journal of Institutional Economics by Anthony Gill and Michael D. Thomas. [Editor’s note: Gill also recorded this charming poetic version of the paper. See also below.]

The authors of this article approach the question in a mindset more informed by the cultural equivalent of Orgel’s Second Law – social evolution is cleverer than you. As they put it, if “gifting is a major source of social inefficiency, economists face two puzzles: first, why has the practice endured for so long? Second, why has it been common across widely disparate cultures? Gifting is a near-universal institution…If gifting was inefficient as Waldfogel claims, why would this cultural institution exist so ubiquitously and resist replacement?” Gill and Thomas take the fact that gifting has developed across so many cultures and existed for so long to be a good indicator that gifting serves a valuable purpose. If your reason tells you that the tradition of gifting is without value, the most likely explanation is that you’ve overlooked something, and not that you, personally, are smarter than the centuries of accumulated experience that produced the tradition. 

Gill and Thomas see gifting not as a static series of individual acts, but as part of a more dynamic cultural process with larger implications and importance. Even if individual gifts are inefficient in the way Waldfogel says, gifting as a practice allows for the development of crucial social norms regarding trust and reciprocity, upon which a great deal depends. And in a way, the fact that gifting often produces less value for the recipient than it costs the giver is itself part of the value of gifting as an institution – the authors make an analogy with burnt sacrifices. A burnt sacrifice destroys the value of the thing sacrificed, but that very fact also conveys the seriousness of the person offering the sacrifice in a way that a costless act would fail to demonstrate, making it a more socially valuable signal. This is true of gifting as well:

When we see many others merrily purchasing, wrapping, and exchanging gifts during the holidays (or other gifting events), and doing so on a regular basis, we can assume that most others in society are acculturated into the norm of sacrificing resources for the sake of others and graciously accepting those sacrifices when offered to them. Gifting rituals represent a manifestation of the folk theorem played extensively throughout societies. Although the laboratory experiments on iterated cooperative play often involve the same (sometimes quasi-anonymous) players, publicly visible gift-giving implicitly signals individuals are choosing to cooperate in a game in which they expend resources and potentially create static deadweight loss. Gifting, in other words, is the folk theorem lived daily; we learn to be trustful in commercial interactions by playing out a seemingly wasteful game. Again, it is the iterated process of gifting that is more valuable than the actual gifts themselves.

In all, the gifting process generates or reinforces four key values over and above the values of the individual gifts as such. They represent a willingness to sacrifice for others in a way that inspires gratitude, so that even “if the received gift is below the price the recipient would have paid, the grateful recipient understands that the giver sacrificed resources and appreciates the effort to signal a desire for an ongoing relationship.”

Gifting rituals also provide repeated opportunities to demonstrate reciprocity, and confidence in reciprocity “initiates, replicates, and extends the trust relationship. It precedes the generalized trust that explains the extended order.” Gifting is also a publicly visible social tradition. The visible and widely known tradition of gifting for holidays, birthdays, weddings, other socially significant events can “provide the visible smoke for our burnt offerings. They bring us closer to those we don’t know well by connecting us with a common cultural practice. When people know that others are involved in sacrificial giving, trust develops, networks expand, and markets flourish.” Gifting is also ritualistic, and “highly visible [rituals]…extend the iterated game to the world of quasi-anonymous strangers. Year after year, at Christmas and birthday parties, we play tit-for-tat with one another and observe others involved in the same game even if we don’t play with them directly. The shared social traditions observed in various giving rituals remind us we are part of a larger network of people – most of whom we don’t know – that share a common heritage of generously giving and graciously receiving. Trust, necessary for extended markets, grows from this.” 

So, it seems that gifting is a worthwhile practice after all. Gill and Thomas argue that Waldfogel is narrowly focused on whether individual gifts are statically efficient. But because Gill and Thomas wisely understand that an institution is unlikely to be so widespread and long lasting if it’s truly without value, they are able to see the bigger picture, and describe how the institution of gifting can be dynamically efficient

All of this brings to mind an idea summed up wisely by Russ Roberts in his book (and wonderful potential Christmas present!) Wild Problems, when he said: 

It’s also not a bad idea to keep tradition in mind. I think most of us in modern times disdain tradition as the equivalent of superstition. It’s not a bad idea to think of it instead as what has survived the test of time…Sometimes old-fashioned beats cutting edge.

So, this holiday season, be of good cheer and bask in the traditions of gifting and gratitude. And don’t let Scrooge tell you otherwise.