Why Economists Think You’re a Bad Gift-Giver

Are you a good gift-giver? The answer is probably no — especially if you ask an economist. They’d tell you that the perfect Christmas gift is … no gift at all. Okay, not exactly.

In 1993, economist Joel Waldfogel studied how much people valued their Christmas gifts compared to how much those gifts actually cost. His conclusion? Holiday gift-giving wastes a lot of money — because most people value their gifts at less than the retail price.

Waldfogel calculated that, of the $38 billion Americans spent on gifts the previous Christmas, as much as $13 billion was wasted.

The group that did best at giving people something they truly valued? Significant others. The worst? Grandparents.

So, what do economists think we should do instead? Cash (or at least gift cards). That way, people’s gifts align with what they actually value.

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