Thursday is Thanksgiving Day here in the United States and many of us will gather with family and friends for the holiday feast. If you have been invited to share Thanksgiving with others (and if you are interested enough in wine to be reading this column), then you must confront a perennial problem: what wine should you bring?
Why is the choice of a gift wine an economic problem? Well, it isn’t much of a problem if you plan to drink it all yourself. Then you should just buy what you like — but don’t expect to be invited back next year!
Since the point will be to share the wine with other guests, the choice is more difficult because just as you can’t be sure exactly what dishes will be served, you cannot be certain what wines the other guests will like the best.
There is a pretty good chance that you will experience what economists call a “deadweight loss” which is more or less where the benefit that the guests derive from your wine is less than what they’d have gained from a simple cash transfer. The story (which is possibly true) is told about the time Malcolm Forbes threw himself an extravagant birthday party where the guests were served some of the rarest, most expensive wines on the planet. Forbes went from guest to guest pouring the evening’s show-stopper wine. Finally he came to Warren Buffet. Wine? said Forbes with a smile. No thanks, Buffet replied. I’ll take the cash!
Warren Buffet understood the concept of deadweight loss and wanted nothing to do with it!
The Problem of Other People’s Money
The problem is asymmetric information. You know your own preferences and budget situation pretty well and so you have a fairly good idea of what you are giving up when you buy an expensive bottle of wine as a gift. But you don’t know the preferences of the other guests very well or whether they would prefer your wine or a simple cash payment to be spent on something else. You can’t be sure that their gain is greater than your loss.
This leads (I hope you are following along) to the conclusion that you are most efficient when you spend your own money on yourself because you can fairly well calculate both the gain and the opportunity cost. You are less efficient (in terms of deadweight loss) when spend your money on others. You are even less efficient when you spend other people’s money on yourself. And you are hopelessly inefficient when you spend others people’s money on other people. What do you think?
So it would seem like the most efficient thing to do would be to decline that dinner invitation and stay home with your wine. How sad! No wonder economics is called the “dismal science.”
It’s Not About the Wine
But here’s the notion that saves the day. Thanksgiving is not really about the wine (or the turkey or the green bean casserole), it is about the sharing. Thanksgiving is more public or communal good than private good. And so, if you do it well, the particular elements of Thanksgiving including the wine will play a secondary role to the general warmth of the shared experience.
I used to get frustrated when wine wasn’t the centerpiece of gatherings, some of which were actually organized to celebrate the wine. But then I got over it. Wine is doing its job when it makes everything else better. Don’t you agree?
This fact changes a bit how you might approach your choice of a Thanksgiving wine to share. Cost is nearly irrelevant. Picking a wine that draws undue attention to you (and your fine taste or great wealth) almost defeats the purpose. A modest wine that makes everyone smile — maybe something with bubbles? — will serve very well. And then you can concentrate on what Thanksgiving is really about.
That said, no one will complain if you bring a nice Port, Madeira, or Sauternes to savor at the end of the meal.
Happy Thanksgiving, everyone. Enjoy the wine and the feast and most of all each other!