Christmas is Destroying Our Wealth
Stuart Jeffries, in the Guardian, teaches us some economics about the Joy Of Giving.
deadweight loss: losses to one person that are not offset by the gains to someone else. Waldfogel estimates the global deadweight loss of Christmas 2006 to be more than $25bn (about £15bn).
All too many of us are destroying value when we buy presents. “People’s own choices generate 18% more satisfaction “ per dollar spent“ than do gifts,” he says. It is an orgy of wealth destruction, and in recession that’s one of the last things we need.
We have always tried to teach our children how wasteful gift-giving is but, according to his helpful new book Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays,
economics professor Joel Waldfogel argues that there are three justifiable economic reasons for giving people gifts. They are:
- Redistribution You are Robin Hood in an inegalitarian world. This is why, in the name of maximising utility, it’s OK to nick cases of Puligny-Montrachet from your boss’s house and hand them out at soup kitchens (but only to those who you’re sure aren’t alcoholics).
- Paternalism Your daughter needs a hat. There’s no way she’ll ever buy one herself, so you get it. Then she loses it on the bus. So you have to buy her another, which she moans about for being itchy. Nobody said Christmas was going to be easy.
- Altruism We try to make the recipient as satisfied as possible by getting them stuff they’d like. This only happens in your dreams or to my brother Neil who, now I think about it, is really good at buying presents, damn him.