Seasonal advice from the dismal science, Part 3 of 3

Buy next year’s Christmas gifts next December, not next week. The sales will beckon and a few organized shoppers will be tempted. Resist. What you gain in lower prices, you will lose as the year wears on. There are interest payments and storage costs, but worse is the loss of adaptability. If your gifts are carefully chosen, some of them will need to be junked as your friends, or their tastes, change. If they are bland and generic, worse yet. Flexibility is valuable, and there’s nothing wrong with paying for something valuable.

Make your New Year’s resolutions a little firmer. It was Thomas Schelling who pointed out that the your fight to lose weight is effectively a battle of wits with yourself: the body-conscious dieter battles the weak-willed gourmand who chooses chocolate dessert at every opportunity. Elementary game theory suggests that your inner dieter can gain the upper hand by making a strategic pre-commitment. Make a bet with a friend that you’ll lose 20 pounds or donate $200 to a favorite charity, and another one that if you don’t lose 10 pounds you have to send $200 to Martha Stewart.

Sign a petition: Alan Greenspan to replace Santa Claus. “He knows if you’ve been bad or good, so be good for goodness’ sake.” Haven Gillespie’s famous lyrics suggest that behind the cotton-wool beard lurks Clint Eastwood. What a joke. We all know that Santa loves the kids too much to follow through with sanctions on naughty children. Naughty children know it too, which is why parental threats over the next few days will go unheeded. Nobel laureates Finn Kydland and Edward Prescott anticipated just such credibility problems – with monetary policy, as it happens, not stockings, but the principle is the same. Inflationary monetary policy has been banished by drafting in hard men such as Paul Volcker and Alan Greenspan. Now that Mr Greenspan is retiring we know what his next post should be: Replacing that soft old fool Santa Claus. Children would know they had to be good, would be good, and the stockings would be filled after all.

Merry Christmas.