Just What I Never Wanted!

Want to save Christmas? Keep giving terrible Christmas presents.

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Christmas curmudgeonry has grown as monotonous as the music a Salvation Army kettle-clanger makes. First, the ACLU spoils Baby Jesus’ City Hall camp-out by filing a lawsuit somewhere. Then, the Christian greetings police refuse to turn the other cheek at sales clerks who don’t sufficiently reciprocate their faith-based merriment. Then, secular spendthrifts denounce the excessive commercialism that undermines a day ostensibly devoted to peace, joy, and football. So at least give economist Joel Waldfogel credit for coming up with a new way to tell us how much Christmas sucks. In his new book Scroogenomics, the University of Pennsylvania economics professor argues that our holiday spending binges aren’t efficient enough. For example, say I buy you a toaster for $50, and you buy me a waffle iron for $50. If neither of us really wanted the gifts we received, and would only pay $25 for them if we had to buy them ourselves, we just destroyed $50 in value. Multiply this transaction millions of times, and you can see that the gap between how much money we spend on gifts and how much satisfaction we derive from them is huge, totaling billions of dollars of year. Economists call this destruction of value “deadweight loss,” and according to Waldfogel, the deadweight loss that Christmas generates each year qualifies it as a kind of economic tornado.

  • Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays by Joel Waldfogel. 186 pages. Princeton University Press. $9.95.

If Waldfogel sounds like a man who’s on a collision course with Tom Arnold (or whoever it is that the Hallmark Channel has hired to play the Ghost of Christmas Future in its latest remake of A Christmas Carol), nope, it’s worse than that. Because, ultimately, dismal scientist though he be, Professor Waldfogel actually wants to make Christmas more satisfying for us all. If we’re determined to engage in an orgy of Yuletide spending, he counsels, we ought to at least make our spending less wasteful. What he doesn’t seem to recognize, however, is that it’s the holiday’s very wastefulness that imbues it with much of its spiritual power. Eliminate all those fruitcakes and singing trouts that nobody actually wants, and you no longer have Christmas.

Every year, of course, we sink a lot of cash into Christmas. But how much exactly? Or even roughly? According to the National Retailers Federation, Americans spent $381 billion in November 2007, $430 billion in December 2007, and $347 billion in January 2008. By figuring out the differences in spending between November and December ($430 billion – $381 billion = $49 billion) and between December and January ($430 billion – $347 billion = $83 billion), and then averaging those differences ($49 billion + $83 billion / 2), Waldfogel determined an amount we can attribute to “holiday spending” — $66 billion.

To find out how much we value the gifts we receive at Christmas, Waldfogel has conducted four surveys amongst his students since 2002. Specifically, he asked them “to report value and price both items had received as gifts and items purchased for themselves.” In other words, if they bought a hat for themselves, how much did they pay for it and how much, in dollars, did they value it? And if they were given a hat, what did they think the price had been, and how much did they value it? Each time Waldfogel conducted the survey, it yielded similar results. “People’s own choices generate about 18 percent more satisfaction — per dollar spent — than do gifts,” he writes. Thus, when we spend $66 billion buying gifts for others, we produce $12 billion less in value than we would have produced had we simply spent the money on ourselves.

You don’t have to be an economist to see at least one big flaw in Waldfogel’s calculations, however, just a shopper. While he initially describes the $66 billion bump in December as “holiday spending,” he ultimately treats it as “gift spending.” But how much of that $66 billion actually goes toward Christmas trees, lights and ornaments, yard decoration services, snowflake sweaters for your poodle, and most important, all the crap you end up buying for yourself when you’re out shopping for others on the day before Christmas? If the average consumer is anything like me, then the actual amount we spend on gifts is probably more like, oh, $30 billion, and our “annual deadlight loss” is less than half the amount that Waldfogel says it is. But since it’s the season for goodwill, let’s give Waldfogel the benefit of the doubt and say his totals are, by some Christmas miracle, exactly right. As a result of our gift-giving, we destroy $12 billion in value each year.

But maybe we should destroy $12 billion, or even $24 billion, or $36 billion — such “losses” harbor assets that may be harder to measure than “immediate gratification” but are valuable just the same. The great paradox of Christmas is that we use commerce and material goods to remind ourselves that commerce and material goods aren’t important. What matters are the feelings of compassion, gratitude, and benevolence the season engenders. Over the years, we’ve developed a vast array of rituals and props to help summon such feelings and inspire us with Christmas spirit  — the tree, cards, presents, wrapping paper, holiday sweaters, egg nog, mistletoe, Christmas albums, etc. The more rituals and props we create, the more we enjoy the day. The more we enjoy the day, the better the market for additional rituals and props. Without commerce, Christmas wouldn’t be Christmas — and yet we still want it to be something more than a particularly good day at the mall. And that’s where inefficiency plays a role as important as Rudolph.

In Waldfogel’s estimation, we’d get more satisfaction from Christmas – and destroy less value – if we all gave gift cards to each other instead of traditional presents. That way, we could ultimately choose our own gifts for ourselves, which we’re 18 percent better at that than other people are. And just like that, Christmas gift-giving is rationalized and annual deadweight loss disappears. To add a dimension of seasonal goodwill to the process, Waldfogel proposes that the ultimate present is a gift card that allows its recipient to donate the amount of the card to a charity of his or her choice. People like giving money to charities, he explains, but they treat it as a luxury, something they would do, or do more of, if they had more money. Giving gift cards earmarked for charity, Waldfogel concludes, is a way to help people fulfill their altruistic impulses. And thus we take a wasteful practice  — buying gifts for people that we’re not good at buying gifts for — and turn it into an efficient and virtuous one.

On the one hand, this is an admirable idea. On the other, it’s a selfish one, because even with the addition of the charitable component, it’s premised on the notion that we should get exactly what we want, especially at Christmas. Near the end of Scroogenomics, Waldfogel describes a hypothetical exchange between a grandmother and her grandchild. He’s hoping for Grand Theft Auto, she gives him a kaleidoscope. He’s disappointed with the gift and contemptuous of his grandma’s poor gift-giving skills, but “musters a smile” and thanks “the old bat” anyway. “We’ve trained him for this type of moment, and he passed,” Waldfogel concludes.

But did the hypothetical brat really pass, or are there perhaps more ways than well-masked contempt to respond to a gift that doesn’t sufficiently meet one’s expectations? When we get that kaleidoscope, or that Garfield page-a-day calendar, or that keychain that moonlights as a crummy flashlight, it gives us an opportunity to cultivate gratitude, to focus not on the dollar values we apply to things, but on the feelings and intentions behind them. Waldfogel anticipates such arguments and attempts to pre-empt them. Essentially, he suggests that the sentimental value we attach to gifts — whether we love them or hate them — remains constant, so a gift that we actually like will always be worth more to us. But is this really true? A gift you’re really pleased to receive likely has positive intentions behind it — love, friendship, gratitude, etc. — but those intentions can get subsumed by the fact that you’ve just received something you really really want — your focus turns toward the awesome gift you just got. But when the gift you’ve just gotten is tacky, useless, completely objectionable, what else is there to focus on but the giver and the good impulses behind it?

There is value in learning that we don’t always get what we want, and it’s not just sentimental value. There is value in developing a capacity to appreciate things that aren’t immediately gratifying. There is value in getting a sweater that we don’t love so much that we won’t wear it while cleaning the garage. Getting exactly what we want, satisfying our own desires, is what we  devote ourselves to on every day of the year except December 25. Christmas, in contrast, should be messy and inefficient. It’s a day for cultivating grace and unconditional gratitude. We’re not assured that the gifts we give are going to be accepted with 100 percent satisfaction, but we give them anyway, with a generous, hopeful spirit, on the chance that they might. We’re not assured that the gifts we receive are going to please us, but we accept them anyway, with the same generous spirit. Even for the most secular among us, Christmas thus becomes a day of faith. • 16 December 2009

Greg Beato is a contributing editor at Reason magazine. Follow @GregBeato on Twitter.

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