If you’ve resigned yourself to giving cash or a gift card this Christmas, take comfort in US economist Joel Waldfogel, who has condemned present buying.
In his 2009 book, Dr Waldfogel denounced the “orgy of wealth destruction” that occurs every year over the festive season because gift givers don’t know what recipients truly want, and thus misallocate billions of dollars of wealth. The tome was appropriately named Scroogenomics.
US news channel CNBC caught up with the economist this week to see if he still holds to this view. Cash givers are in luck: he does. He has mellowed just a little, though.
“It’s an unfair caricature to say I want people to stop buying gifts of course … because people have warm fuzzy feelings from doing so. Stopping gift-buying is problematic because the warm fuzzies are no longer there,” Dr Waldfogel told CNBC.
“What might be a much better thing to do is consider giving a gift card which doesn’t have the same stigma as cash … or perhaps even a gift to charity in your brother-in-law’s name.”
So there you have it. A US professor in economics says it is perfectly fine to give cash or a gift card. When your family member opens the envelope and disappointment wells into their eyes, you might want to send them a PDF version of his book.
The advice may come just in time for many Australians. We were expected to spend about $3.3 billion over Friday and Saturday on last minute gifts, according to the Retail Council.
And one in 10 of us will dash through the shops on Saturday, the day before Christmas, looking for presents, a survey commissioned by department store chain David Jones found.
In his 2009 book, Dr Waldfogel estimated that approximately $US12 billion a year in the USA, and $US25 billion globally, was misallocated by Christmas gift giving.
The crux of his argument was that it is very difficult to predict that the recipient will find your gift more economically useful than money.
“The idealised Christmas gift is a carefully chosen item that delights the recipient, opening his eyes to a new consumption possibility, and at the same time functions as a conduit of warm feeling between giver and recipient. Part of this tall order is delighting the recipient, meaning delivering him (or her) something that he would have loved to have, if only he had been aware of it.”
But he wasn’t a total scrooge. Dr Waldfogel said it is possible to pick something the recipient really wants if you know them well, especially a partner or child.
“Our gifts can sometimes beat cash, but this requires givers to know recipients well. Using intimate knowledge of their preferences and current possessions, along with your superior information about some products, you can sometimes find things that recipients would have been delighted to buy themselves, if only they had known about them.
“These are things like your obscure music discovery that you think, based on some experience, that I’d like or that comic book you know has eluded me for 20 years. That is, we can try to give them things that they would immediately recognise that they want, but have been unaware of.”
For everyone else, cash or gift cards are probably best, the economist wrote. And he was hopeful his message would catch on.
“It’s generally hard to change people’s behaviour. But one development that gives me hope is the rapid adoption of gift cards. They’ve gone from a blip to perhaps a third of holiday spending in a decade. They have shed the stigma of cash to become an acceptable, even highly sought-after, gift.”