Are Bad Holiday Gifts Ruining the Economy?
We've all been there, you're unwrapping your presents on a perfect Christmas morning and there it is: the dreaded reindeer sweater from your Great Aunt Mildred.
Most people would just stick it in the back of the closet and forget all about it, but that bad sweater could be at the center of what one man is calling an "orgy of wealth destruction."
Joel Waldfogel, author of Scroogenomics, thinks bad gift giving is the scourge of the holiday season and is cheating consumers out of $25 billion worth of satisfaction.
Waldfogel argues that gifts chosen for you are on average worth 20 percent less than the things you buy for yourself. When that 20 percent is extrapolated to the global population, it adds up to some pretty costly mistakes.
The typical expenditure during the U.S. holiday season is $65 billion per year and worldwide it is $145 billion, according to Waldfogel.
"Around the world we're missing out on $25 billion worth of satisfaction again because of the mistaken choices made by others, as opposed to the choices we would have made for ourselves," he said.
Waldfogel does concede that the joy of giving is worth something, but counters that it does not justify the giving of bad gifts. It's the badness of the gift that is the problem, the joy is there if you give a good present too, he said.
For serial bad-gift givers, there are ways around the problem, Waldfogel said. Gift cards are a good option because they give the choice to the receiver, and they don't have the same stigma as cash, he said.
Meanwhile, there is always the eBay option for people who have gotten something they really didn't want.
The argument stacks up from a purely economic point of view, Peter Dixon, senior economist at Commerzbank Securities, told CNBC. But if consumers stopped giving bad gifts the effect on the global economy could be serious during this period of tentative recovery, he said.
"From a growth-driven market perspective, I'm afraid it's not something we'd be desperate to see," Dixon said.
"It goes to the very heart of the consumer society in which we operate… It would certainly cause us to have to rethink our social priorities very significantly if we were to cut back on consumption in this way," Dixon said.
Waldfogel hopes his book will end up in people's stockings, but says he's not a hypocrite.
"I say buy it for yourself, and if you like it, buy another one to give as a gift. If you don't like it, just give that one as a gift," he said.
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