Do Something, Give Nothing: The Simple Economics of Holiday Giving
At this point in our collective consciousness, we all bemoan the crass consumerism that has become the dominant emphasis of the Christmas/Holiday season. Even the most chipper of Christmas boosters (the mistletoe-toting, eggnog-sipping, Santa-hat wearing, enthusiasts) will admit that Christmas has gotten away from us, and we have all drank the seasonal Kool-Aid when year after year we continue to load up our shopping carts with all manner of shiny consumer detritus (stuff I like to call “future trash”). But like a rising tide that swells at the close of every year, Christmas consumerism (even in this wintry economic climate) seems to keep on keeping on.
So it is pointless for me, or anyone else, to try to derail that train of conspicuous consumption, no matter how much of a runaway disaster it may be. However Joel Waldfogel, author of Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays, takes issue with the practice of gift giving as being largely reckless, economically speaking. Waldfogel contends that the problem is that gift giving is a very sloppy method for matching stuff with people, and that the practice of matching gifts with recipients results in massive value destruction.
Waldfogel asserts, “Over the years, I’ve conducted numerous surveys to compare the satisfaction derived from gifts with items people purchase for themselves. The answer that emerges is that people value items they buy for themselves nearly 20 percent more. This means that the $65 billion in annual holiday spending generates about $12 billion less satisfaction than it would if we spend the money on ourselves.”
When considering the entire planet of Christmas frenzied shopping, worldwide people spend nearly $150 billion on December gifts per year, destroying about $25 billion in value (see Waldfogel’s opinion piece in the Boston Globe to see what he has to say about sentimental value).
Considering this, some might say that gift cards are the most economically viable way to go for holiday gifts, but more often than not approximately 10 percent of all gift card value is left unused (also tremendously wasteful). Not to mention that if gift cards are used to their maximum, gift recipients are often moved to pay over the allotted amount in order to obtain all of the inherent value of the card.
For me, the best, most economically prudent gift is the charitable donation in the name of the recipient (providing the gift goes toward a reputable and well operated charity). Sure a young child is not likely to be thrilled by a gift like this (for them you would probably be advised to forgo the Amnesty International donation and stick to toys and dolls) but for most adults this will be moderately appreciated (considering the large majority of adults claim they do not have the financial means to give charitable donations).
What are you doing this year as far as holiday gifts? How do you manage the compulsion to purchase with abandon? Is anyone making gifts in lieu of lots of indiscriminate buying? How do you make the holidays more palatable, both psychologically and economically?