Leave it to an economist to trample on a cherished year-end tradition.
Joel Waldfogel, an economist at the University of Pennsylvania’s Wharton School of Business, has written a book that promoters hype as one “Santa doesn’t want you to read.”
“Scroogenomics: Why You Shouldn’t Buy Presents for the Holiday” is a brief but biting little book about how our obsession with holiday spending generates some $85 billion dollars of economic waste each winter.
Holiday gift-giving as an institution for “allocating resources” — getting stuff to the right people — is a “complete loser,” according to Waldfogel, who has written for the online magazine Slate and calls himself a yuletide researcher.
He says we’re like crack addicts whose addictions go back at least three generations, when holiday spending was an even bigger share of a smaller economy. And it’s not just an American experience, he says. It’s a global problem.
Think back to that hideous green and yellow apron you got from your aunt or the snowflake sweater from Grandma or the singing fish from your brother. Or the jumping alarm clock you gave your cousin. Waldfogel says every gift that disappoints is money wasted. In general, when we buy for ourselves, every dollar we spend produces at least a dollar in satisfaction because we shop carefully and purchase items that we really want.
Not so with gift-giving. It’s usually an angst-laden ritual of poor choices financed by already maxed-out credit cards for gifts we wouldn’t buy or want for ourselves. In the end, the recipients often are left with gift wrapping and hopes both shredded on the floor next to the Christmas tree. Waldfogel calls that “deadweight loss”: paying out good money for marginal benefit.
It’s Christmas, you argue, it brings people together and creates memories. How bad can that be?
Humbug, Waldfogel says. He essentially likens Santa — and all the various forms and names he takes — to a drug dealer who is financially destroying communities around the world.
“Where others see hearthside scenes of sharing, I also saw — through the eyes of an economist — a large and organized institution of value destruction, hiding in plain sight but obscured for most people by their warm childhood memories,” Waldfogel says in the preface of his palm-sized, 174-page book, whose cover pictures a crying toddler sitting atop a gift-wrapped box.
Waldfogel suggests we cast our visions of sugarplums aside and take a cold, hard look at our annual ritual.
“If you discovered a government program that was hemorrhaging money — spending $100 billion of taxpayer money per year to generate a benefit of only $85 billion — you would be outraged,” Waldfogel says.
Waldfogel doesn’t just stomp on our tradition. He offer solutions, such as charity gift cards that can be used as a force for good, and suggests transferring balances on regular store gift cards to charities after a certain time rather than let them go unredeemed.
That said, of course, Waldfogel surely wouldn’t mind if you made his book the last Christmas gift you ever buy.
Sobering ‘Scroogenomics’
Holiday spending in the United States*
8
Percent of the year’s shopping days in December
23
Percent of the year’s spending at jewelry stores
16
Percent of spending in department stores
15
Percent of spending in electronic stores
23
Average number of gifts to buy
$66B
Money spent
$218
Per capita spending
$12B
Deadweight loss (billions)
$200
Per capita holiday spending in the 2000 decade (per year)
$75
Per capita holiday spending in the late 1930s (per year)
40%
Amount of Christmas spending debt-financed between 1945 and 1980
65%
... In the last 25 years
* Most figures are from 2007
Source: “Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays,” by Joel Waldfogel (Princeton University Press)
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