Should we stop buying Christmas presents?

Christmas is a vital period for retailers and manufacturers

By Finlo Rohrer
BBC News Magazine

Ever had a present from a far-flung aunt or an over-enthusiastic colleague that you really didn't like but were socially obliged to pretend otherwise? One economist is on a mission to stop this wasteful category of Christmas giving.

Ornaments.

How often have we given them? Many times, no doubt. And yet, how often have we ever really wanted to receive them ourselves?

Whose every waking moment is filled by a craving for a pair of half-size martini glasses, holding unpleasantly perfumed gel candles, embellished with a decorative vine?

Who has stepped lightly through January, buoyed by the Christmas joy that is a purple glass bowl filled with silver spray-painted pebbles?

Gift vouchers are unlike cash in that they avoid the awkwardness Joel Waldfogel

Ornaments may be over-represented in the forlorn ranks of the unwanted gifts that mysteriously fail to make it to our new houses when we move, but they are far from the only offender.

If we were being honest, we'd repudiate those Brandreth-style jumpers, the biographies of 18th Century admirals and the coasters with scenes from the Lincolnshire countryside. We know our auntie meant well, but still.

Joel Waldfogel takes this feeling of dissatisfaction further. For 15 years the economist has been studying the giving of gifts. The results do not make for happy reading.

"When other people choose for us they do a poor job compared to when we choose for ourselves," explains Mr Waldfogel. He will present a public lecture on the subject at the London School of Economics on Thursday evening.

20% discrepancy

His new book, Scroogenomics: Why You Shouldn't Buy Presents For The Holidays, released just in time for the Christmas gift market, explains why we should turn our backs on the Christmas gift market. It's all a big waste, he believes.

Over the years, Mr Waldfogel's surveys have asked people how much they would have paid for gifts had they not received the items. The average the recipient would have paid comes out at nearly 20% less than was actually paid.

This is the kind of thing that economists don't like. The ideal in economics is that surplus value is created.

DEADWEIGHT LOSS Situation in which no party benefits An example is a highly competitive market in which even more companies enter the marketplace driving selling prices down further Source: Wiley Dictionary of Economics

"The seller gets a price that exceeds his costs and the buyer gets an item he values above the price," Mr Waldfogel explains.

In the Christmas present market, the second part of the equation often fails. And with people spending $145bn (£87bn) a year worldwide on festive items, that could be more than $25bn (£15bn) of waste, says Mr Waldfogel. It's what's known in economic terms as a deadweight loss.

The economist emphasises that he isn't advocating the end of Christmas presents as a concept.

"We do pretty well in buying things for people we know well. And children would be devastated if they didn't get presents."

But when it comes to buying for people who live far away or who we don't know well, he thinks we might give gift vouchers a try instead.

Of course, this does throw up a problem or two.

Anyone who has seen the episode of Seinfeld where Jerry commits a major faux pas by giving Elaine cash for her birthday, would be wary about doing the same. And gift vouchers do seem a little close to that.

Dormant vouchers

Mr Waldfogel disagrees.

"Gift vouchers are unlike cash in that they avoid the awkwardness."

But gift vouchers also often lie dormant in dark recesses of the recipient's cupboards, never to emerge. "10% of the value isn't used - it ends up being transferred from the giver to the retailer," says Mr Waldfogel.

He wants retailers to accept a measure that allows vouchers to expire and trigger a donation of the value to charity. And, Mr Waldfogel suggests, a present of a donation to charity, or charitable goat purchase, should be acceptable.

Some gifts may seem perplexing when reviewed at a later date

"I'm finding people are very sympathetic to the idea of charitable giving. There is a real fatigue about giving that people know is producing unwanted results."

Gary Davies, a professor of corporate reputation at Manchester Business School, and lead author on the forthcoming paper Gifts and Gifting, is not a fan of abandoning gifts for people we don't know that well.

"[It's a] typical economist's view of an issue where it isn't the economics that are driving the issue. It's the social side, the symbolism of the gift."

And the kind of gift scenario where the protagonists don't know each other well can be a social minefield, with the giving of cash or vouchers being seen as plain odd.

"It would be seen as a bribe," says Mr Davies. "There are lots of business gifts. I will give my secretary a bottle of champagne. Am I supposed to give her money? I think she might be taken aback. It would be seen as inappropriate."

And of course, that's at the root of gift giving - it's a social transaction, not an exchange of useful items.

We may not relish the receipt of the LP of a singing Irish monk, the electric blanket, the nylon, teal, lace thong or the gaudy mock Faberge egg - all real examples gleaned from BBC News website colleagues - but we must recognise that it is the thought that counts.

"What we like is the fact that our nearest and dearest have thought about it," says Mr Davies. "One of the main social aspects of gifting is building a relationship."

A couple at the outset of courting are a good example of people who might not be fully au fait with each other's present priorities yet.

Economic benefit

And there would also be economic consequences if people suddenly stopped buying presents. Typically half of retailers' profits come from the fourth quarter, notes Mr Davies.

But in opposition to the economic benefit, there is also the sheer waste of unwanted presents.

"One can imagine a market for green gifts, buying people experiences that don't involve tangible products," says Mr Davies.

Underlying the glut of unwanted gifts is a problem with social norms. These are the obstacle to us telling Aunt Agatha the truth.

Mr Waldfogel won't reveal the worst present he's ever had.

"I'm not allowed to say. One of the reasons that it persists is that we can't give feedback."

If we ever want to get another present, we keep schtum.

"A friend of mine gave his wife an electric piano," says Prof Davies. "She really didn't like it and about three years later she gave it away. He still hasn't had the courage to ask her why she doesn't like it."

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Below is a selection of the worst things you ever gave or received at Christmas.

A cassette tape (this wasn't that long ago either) of pan pipe versions of the greatest romantic songs ever. I'm a metalhead.
Rob Walker, Kidderminster

A blush bear that snapped in half
Jake Dixon, Leeds, England

An orange plastic umbrella from my new boyfriend's mum and dad - a sure sign I wasn't particularly welcome. It was tacky and cheap. The gifts are far nicer and thoughtful after 18 years of happiness together.
June, Melbourne, Australia

A road map of London, bought for me by my mum and dad one year, which is great, but I live in Brighton!
Tony Gilmour, Brighton

Boxes of chocolate or other sweets - I'm diabetic.
Jenny, Taunton

A jar of hollandaise sauce, some charcoal biscuits and some jam, from one of my aunts a couple of years ago. As bizarre presents go this certainly was the strangest.
Rachel, Southampton

Four copies of the truly dreadful Mastermind game (coloured sticks in holes) which I received as a child in a single year. That really does stick in my mind.
Neil, Nantwich, Cheshire

A lawn mower, given to me by my boyfriend. I was mortified, even though it was a useful gift at the time, as it meant I have been mowing the lawns ever since.
H Clewett, WOKINGHAM

A didgeridoo, from my husband. We have never visited Australia, it was not something I'd asked for and I puzzled for hours whilst it was wrapped and under the Christmas tree.
Leanne, Rugby, Warks

A vibrating wrist-rest mouse mat, from my brother, a few years ago. I switched it on once to try to understand why on earth he chose it. It lay in a cupboard for a further six months. I switched it on again just for a laugh - and it didn't work! I was filed in the bin after that.
Carolyn, Manchester

A Cliff Richard LP from my wife, who was a Cliff Richard fan. She resisted my wish to pour boiling water on it and turn it into a useful flower vase.
Tony Cooley, Walsall

A cookie jar in the shape of a cat, from my mother-in-law, knowing I was on a diet and despise cats.
CJ, Liverpool, UK

Fridge Suduko (bought for me by my little sister). I never do suduko, ever, so why she thought I might like to do one whenever I go in the fridge beats me!
Peter, Notts

Matching snow shovels. I grew up in the States and one Christmas my parents gave these to my brother and I. You lot might wish for a white Christmas, but it's not nearly so pretty when you're put to work after opening your presents - and it was a HUGE driveway.
Alyssa, Little Stoke, Bristol

Billy Bass, the singing fish nailed to a board and a lamp in the shape of Garfield - useless, annoying and a total waste of money and resources.
Betti, Brighton

A token for a flying lesson. I thought the envelope was going to contain a ticket to a symphony concert. I cried. What upset me was the giver didn't seem to know me at all.
Annie, Christchurch

A 9ins-high painted plaster-of-Paris statuette of Bruce Lee. My younger brother bought it for my older brother . My sister once bought me a kilo (yes a KILO) of Stilton - on the grounds that I like cheese.
Mary, London

A filing cabinet, which I do actually use as I had just started being self employed, but was not very fun to play with on Christmas morning.
Sam, London, England

Neon coloured nylon leotards. When I was about 10 my strange auntie bought these for my whole family - my mum, dad, little sister and brother and me.
Janet Bunting, Morecambe

A laminator, from my mum. I think I was about 20 at the time. She actually apologised as I opened it, and her excuse was that I am not a "girly" girl and she never knows what to get me.
Louise Wheatland, Lancaster, UK