Feature

The folly of Christmas presents

In fact, research shows that people value gifts 20 percent less than an equally expensive purchase they choose themselves, said Joel Waldfogel in <em>The Boston Globe.</em>

Joel WaldfogelThe Boston Globe

This Christmas season, retailers project a full percentage point decline in sales, said Joel Waldfogel. Too bad it won’t be more. I know that’s heresy at the local department store, which generates one-sixth of its annual business in December. But “as an economist, I look at the estimated $65 billion in holiday spending” and see “an orgy of value destruction.”

Why? Because in general, people do not much like the gifts they receive. In fact, research shows that people value gifts 20 percent less than an equally expensive purchase they choose themselves. Thus, our $65 billion holiday splurge “generates about $12 billion less satisfaction than it would if we spend the money on ourselves.” This isn’t to deny that many gifts, especially those given to close friends and family members, can bring satisfaction to both giver and receiver.

But few gifts compete with a gift card that empowers the recipient to choose for herself. And as for that polka-dot cardigan from Aunt Sally? “You may as well have lit that sweater on fire.”

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