On a recent “Freakonomics Radio” podcast (a segment on NPR’s radio show “Marketplace” where hosts Kai Ryssdol and Stephen Dubner get economist Steven Levitt’s perspective on everyday issues), they discuss the downsides to gift-giving. In particular, they describe a “dead weight loss”: the phenomenon where, after holiday gifts are given, they’re considered much less valuable by the ricipeint than they actually cost the giver. This makes the whole thing terribly inefficient and, according to economist Steven Levitt at the University of Chicago, a huge waste of everyone’s time, energy and money.
However, I’d like to make a case for RE-THINKING the act of gift-giving. When was the last time you gave or received a present, where there wasn’t some sort of unspoken understanding about reciprocity? A real gift should be given out of inspiration and love, without any expectation of anything in return. If we re-calibrate what it means to give presents in our culture — as an expression of appreciation — maybe we’d find ourselves with less dread over the budget-busting, holiday consumerist feeding frenzy at the mall each year. I know I will!
To help, here are some of the Don’ts of holiday cheer (for the Do’s click here), to make your gift-giving truly count:
Don’t Overthink it
In other words, don’t overspend based on what others might think of you. Justin Wolfers from the University of Michigan calls this the Spotlight effect: when you perceive that everyone is looking at the gift you’re about to give with great scrutiny – when they’re not – and you spend too money on it as a result. As Wolfer’s says, “You’re not that interesting. Don’t over think it.”
Don’t Obsess About Jewelry
The saying “Diamonds are a girls’ best friend” has made our country a little “bling” crazy — but economists say there are few places cash can disappear as quickly as Fine Jewelry– especially when diamonds can, literally, disappear (down your drain, at the gym, etc). Consider also, that jewelry is incredibly difficult to pick out for another person; it’s a gamble whether your tastes will be appreciated. Levitt offers his vote for giving fake jewelry as a gift, as paraphrased from an interview:
“Years ago I grew tired of my wife fussing over a pair of diamond earrings I’d given her – she was always too afraid to wear them for fearing of losing them. So, one year I bought her 10 pairs of cubic zirconium earrings for fraction of what the real studs cost me, and my wife loved it. She could continue wearing what looked like real diamonds — but never worry about losing them. Over the years this came in handy, as she’s now almost through her ten pairs of fakes,” says Wolfers.
Don’t Give Gift-Cards Unless It Counts
From an economic perspective, gift cards are a terrible gift. They’re impersonal, it requires the recipient to go to a store you choose (whether it’s a place they normally shop or not) — and that’s if the card doesn’t expire before they get around to spending it. If you do give these as gifts, make it count: make sure there’s enough on the card to buy (an entire) ‘something’ at a store you know they already shop at (you’d never want to give a $25 gift certificate to Bloomingdale’s, for example – since you really can’t buy anything there for $25!)
Don’t Forget About the Little Guy
Don’t neglect this opportunity to thank the folks that make your life easier all year-round. Use this time to pay back debts and favors, to reconcile differences, and be generous to those around you. How about cleaning out closets and donating old coats to the needy, canned food to the homeless—and why not? Tipping your service providers for the year or, just a little more than usual. Spreading holiday cheer doesn’t have to cost more than a few extra bucks here and there.
Don’t Be Afraid to Re-gift
Along the lines of give-aways and swapping (see below), know that re-gifting is a perfectly acceptable way to recycle your unwanted items. Don’t let the giver’s poor choice be a waste — pass the trinket on to someone who might appreciate it more than you will. A note that it’s best to re-gift as soon as possible, so as your recycled gifts don’t become expired, dated, or simply sit around gathering dust.
Photo courtesy of christmasstockimages.com
