Farrell: Would it help the economy not to buy Christmas presents?
The intensified sales promotions for BlackFridayWeekendCyberMonday (the four days should be a word) are not slowing down.
Retailers will carry deals and discounts until the end of the holiday.
The gift-buying frenzy that retailers try to stoke reminds me of the writings of economist Joel Waldfogel, a professor at the Carlson School of Management at the University of Minnesota.
Waldfogel analyzed the “dead Christmas loss” in an article published in the American Economic Review in the early 1990s and in the following book, “Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays”.
Wait a minute. Don’t buy gifts! Its basic point is that billions are wasted during the holiday season as people buy gifts that the recipient doesn’t need or want.
Since these gifts are often worth less to the recipient than the money spent by the donor, the optimal solution is to give money. The recipient can then spend the money on whatever they really want.
Waldfogel’s attack on freebies spawned a cottage industry of comments, but not many converts. A survey of economists by the University of Chicago’s Global Markets Initiative found that two-thirds rejected the thesis.
In the comments section, Marcus Brunnermeier of Princeton remarked, âThat’s the idea. [identifying the right present] it is important! Plus, the money lacks the element of surprise. “
Nobel laureate Angus Deacon noted: “It’s the kind of narrow view that rightly gives the economy a bad name.”
Count me among the skeptics. I like to give gifts. But there are lessons to be learned from the combination of the retail hype and Waldfogel’s thesis.
First, to avoid the hype and post-vacation financial regrets, set a budget and stick to it.
Second, take the time to think carefully about your gift. The connections that giveaways celebrate also seem larger than normal these days. The pandemic is a stark reminder that what matters is family, friends, co-workers and the other people we love and care about. What is appreciated about the freebies is the idea behind them, not the price.
What makes a good gift varies, of course. Maybe that means going shopping to support small businesses and local artisans. Maybe you will choose gifts that express an ethic of sustainability. The work that goes into handmade gifts is appreciated. A charitable donation is in the spirit of the holidays.
Whatever choices you make, this is one of those times when the clichÃ© holds true: thoughtfulness is what matters when it comes to expressing gratitude and love with gifts. .
Chris Farrell is a senior economics contributor for American Public Media’s Marketplace and commentator on Minnesota Public Radio.