PT152 S4 Q22 ExplanationEconomist: Gifts of cash or gift cards

Answer choices, explained

1. A

   Strengthens1% picked this

   The rate at which gifts are returned to retailers has been steadily increasing since the

   This reinforces the idea that people aren't buying us great gifts (we're returning the gifts more and more), and so it argues in favor of just giving us cash or a gift card instead so that we can' choose our own gift.

   1%
2. B

   Irrelevant5% picked this

   Gifts of cash and gift cards currently represent only about 14 percent of

   It doesn't make any difference what % of gifts are currently cash/gift cards vs. items. If I'm trying to argue that "solar panels are more valuable than wind turbines", it doesn't affect my argument one way or the other which one is currently more prevalent.

   5%
3. C

   Unclear Impact33% picked this

   People in the study would have been willing to pay more for gifts chosen for them by close friends and relatives than for

   At first this seems kind of tempting. Granted, the conclusion is just comparing "cash/gift cards vs. things chosen by others". The "others" isn't segregated, so do we really care about gifts from friends/relatives vs. gifts from other people? No, but we kind of like this answer because it seems like the "what about sentimental value" objection we were thinking about. The problem is that this answer choice doesn't control for the fact that friends/relatives are usually going to spend more on our gift than other people would. I might buy a $10 candle for someone I don't really know, whereas I'll buy that $50 bottle of scotch for my brother. The fact that the person I gave the candle to would only pay about $6.70 for it, while my brother would only pay about $35 for the scotch might be all that this answer choice is telling us. In both cases, the author's argument still holds. Since the recipient was only willing to pay 2/3 of what I spent, then wouldn't they have rather just had the cash I spent? If this answer had controlled for the price of the gift, it would have been better: "People in the study would have been willing to pay more for the same gift if it had been chosen by a friend/relative than if had been chosen by others" This would show that there's more to our sense of value than just the object itself. The giver matters, and thus maybe sentimental value is why? But even then it would be a weak objection, because we'd be qualifying the conclusion, "In cases where the gift comes from a friend/relative, we value the gift more than the equivalent cash value." The conclusion is averaging all gifts together in a big lump sum comparison.

   33%
4. D

   Correct59% picked this

   People are unwilling to sell gifts chosen for them by others unless offered about one and a half

   Why this is right

   This helps us argue that "people value gifts chosen by others more than the cash/card equivalent". After all, doesn't the price they would be willing to sell something for indicate how much value it has to them? If the selling price is 1.5 times the cash equivalent, it sounds like they value it more than if someone were to just offer them the cash. Let's say I buy my cousin a $30 piece of art. In the study, she would have said, "I'd probably only pay $20 for that". But once it's in her possession, she says, "I wouldn't sell that for less than $45." This answer creates a lot of doubt about the completeness of the evidence: apparently how much we would pay for something is not a sufficient metric for how much we value that item. Given that what we would pay for something is less than the actual price, but what we would need to sell it is more than the actual price, it calls the author's conclusion highly into doubt.

   Skill tested: Weaken · how this choice captures the argument's function is the move to repeat next time.

   59%
5. E

   Irrelevant: receipts1% picked this

   Most retailers require receipts before people can return gifts for refund

   If anything this strengthens by making it seem like getting a gift that you don't want and then returning it for its cash value or exchanging it for something of equivalent value would be a headache, since we need to have the receipt the gift giver might not have given us.

   1%