Are we better gift-givers now?

Shia Levitt Dec 25, 2007


Doug Krizner: You might have an awkward experience today:
Having to smile and thank someone for a gift you’re absolutely sure you’re never going to use.
But as Shia Levitt reports, some economists say we’re getting better at giving.

Shia Levitt: Despite that great feeling we get after giving a thoughtful present, the fact is, many of us just aren’t as good at it as we think.

Joel Waldfogel: Holiday giving is a wonderful custom, but it’s a lousy way to allocate resources.

Joel Waldfogel isn’t the Grinch. He’s an economist who coined the term “Deadweight Loss of Christmas.”

The idea is simple. When people shop for themselves, they usually value the items at least as much as the price they pay. Not so when others do the shopping for them.

Waldfogel: People value things they receive as gifts about 20 percent less per dollar spent then they value items they purchase for themselves.

That works out to about $12 [billion] to $18 billion of lost value this holiday season.

But Waldfogel says Americans may be getting more efficient at their gift-giving. One main reason: The growth of gift cards. Another new technologies, like online gift registries and eBay.

Waldfogel: It would be upsetting to learn that my recipient had put his or her gift up on eBay. But from an efficiency standpoint, if that gift finds its way to someone who actually values it more than it costs to produce, then that’s going to be efficiency again.

As for Waldfogel’s own holiday shopping, he wouldn’t give any details except to say that he choose all his gifts carefully.

I’m Shia Levitt for Marketplace.

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