As people around the world spend billions of dollars buying Christmas gifts for each other, one economist says the entire practice of holiday gift giving is harming the economy.
The general assumption is that the mass consumption of goods would be great for the economy. But Joel Waldfogel, author of Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays, says that simply isn’t the case, and that it instead causes “global wealth destruction.”
In a webcast earlier this week, Waldfogel called the exchanging of Christmas gifts “the subversion of the usual way that economic activity works,” reports Fox Business.
Waldfogel’s reasoning is this — people receiving gifts tend to perceive its value on an average 20% less than what it was purchased for. The percentage is likely even lower for last minute stocking stuffers like the ones found in the “as seen on TV” aisle at the local drug store.
This leads to “vaporized satisfaction” according to Waldfogel, which he tallies at $28 billion a year.
Even worse, Waldfogel said, are people that pile up the Christmas gifts on their credit cards, and fail to pay off the balance before the next billing cycle. Quoting famous cartoon father Homer Simpson, Waldfogel said people do this “because they’re stupid, that’s why.”
Waldfogel advised that if one does feel compelled to participate in the holiday tradition of gift giving, it should be the gift of cold hard cash.
He writes that gift cards are also acceptable, although they have their own “economic inefficiencies” as on average 10% of gift card value goes unclaimed.
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