They are yuletide traditions as common as turkey and tinsel: the fake gasp of glee, the toothy forced smile, the rote thank you over the gift so ugly or useless you're immediately calculating how long you have to wear it/hang it/use it before tossing it into the back of a closet with all other unwanted offerings of Christmas past.
And now, in a new book called Scroogenomics , a U.S. economist has helpfully done the math on the holiday he declares, as only an economist would, an “organized institution for value destruction.”
Or, as he concludes rather ominously: “A spectre has been haunting the rich economies of the west, and that spectre is wasteful gift-giving.”
According to Joel Waldfogel, the chair of business and public policy at the Wharton School of the University of Pennsylvania, what people pay for gifts rarely matches how much the receiver values them. That's because, except in certain circumstances (mostly involving savvy spouses), people are just better at buying their own stuff.
In surveys, he asked undergraduates to compare their own purchases to gifts, estimating the value of the each item against what they would actually pay for it. Gifts were, on average, 20 per cent less valuable. Grandma's gifts, while well-meaning, were worth even less.
Given that Canadians spent $7.3-billion in 2007 on holiday gifts, according to Dr. Waldfogel, that's an annual loss of $1.5-billion. Worldwide, he suggests, it's the equivalent of throwing $25-billion in the garbage, which might make a person rethink those endless hours spent circling the crowded mall.
And Christmas isn't alone: A similar pattern of loss has been found for other gift-giving holidays, such as Diwali in India.
Despite his book's catchy title, Dr. Waldfogel is really no Ebenezer – though his introduction to Christmas and its wrapper-ripping orgies came later in life with marriage. As he is quick to clarify, after being vociferously accused of Christmas-bashing when he first pointed out the “dead-weight loss” of holiday shopping more than a decade ago, it's the pointless excess, the “sloppy spending,” that riles his economist sensibilities.
“It's probably wrong to pillage the planet in celebration of Christmas,” he writes. “But if pillage we must, we should at least do it efficiently.”
As he observes in his book, however, people have never been doing Christmas particularly efficiently. Consider this telling quote: “There are worlds of money wasted, at this time of year, in getting things that nobody wants, and nobody cares for after they are got.” Harriet Beecher Stowe, American author and abolitionist, made that observation in 1850.
Before there were credit cards, there were organized Christmas Clubs, where holiday shoppers in 1909 could put away extra pennies to cover their gift-giving come December. And the “yuletide bump” in sales that modern-day retailers experience every Christmas can be tracked back to the 1930s, and even earlier in dime-store revenues – presumably during the days when a peppermint candy stick from Santa appeased the kids.
Perhaps the strongest argument against Dr. Waldfogel's theory is that those same retailers now rely on Christmas to boost sales, which in turn generate their own economic gain with jobs, for instance. But buying and selling is a transfer between two parties, and as Dr. Waldfogel points out, during the rest of the year, when people shop for themselves, both the seller and the buyer – who, in smart purchases anyway, should be getting more value back than the price they pay – are mutually benefiting. At Christmas, the seller is still raking it in, but the buyer gets less satisfaction.
