Great article from the New Yorker on why holiday shopping is a waste of time and money. I’ll admit that I am horrible at buying gifts for people. Whenever I find something I think the person would like, I assume that if they really wanted it they would have bought it already.
We all know that bad gifts inflict a costâ€”just think of the rigid smiles that greet an unwanted floral tie or Josh Rouse CDâ€”but itâ€™s surprising how big that cost can be. Since the early nineteen-nineties, Joel Waldfogel, an economist at the University of Pennsylvania, has been doing a series of studies in which college students are asked to put a value on the presents they receive. Waldfogelâ€™s main finding is that, in general, people spend a lot more on presents than theyâ€™re worth to those who receive them, a phenomenon that he calls “the deadweight loss of Christmas.” A deadweight loss is created when you spend eighty dollars to give me a sweater that I would spend only sixty-five dollars to buy myself. Waldfogel estimates that somewhere between ten and eighteen per cent of seasonal spending becomes deadweight loss, which means that billions of dollars a year is now going to waste.