A relatively new book, entitled Scroogenomics:Why You Shouldn’t Buy Presents for the Holidays, argues that holiday shopping is wealth destroying because we end up buying presents people don’t want. The author, Joel Waldfogel, is an economist who makes a classic economics argument — that resources are most wisely allocated by people who make decisions for themselves, in view of their specific needs. He argues that the farther you get from people you really know — spouses and immediate family — and into the realm of nieces, nephews, co-workers, and the like, the more likely you are to buy something ill-considered that is left unused. Gift cards aren’t the most efficient response to this problem, either, because about 10 percent of gift cards never get redeemed. An interview with the author is here.
Let’s face it, though — the Seinfeld episode hit the nail on the head. Giving cash for Christmas, or for a birthday, is widely viewed as a cold, thoughtless, last-minute gift. This perception seems a bit unfair to me. I can honestly say that every time I’ve received a check for a birthday or a holiday I have used the money with grateful appreciation. I can’t say the same for the tangible gifts I’ve received — and I know that, over the years, I’ve picked out many real clunkers for friends and loved ones, too.
The only drawback to giving cash, in my view, is a non-economic one. I feel good when I think about what Kish and the boys might want for Christmas and then actually buy presents for them. I don’t get that feeling by writing a check. But maybe I can get that feeling by limiting my feel-good, but otherwise wealth-destroying, purchases to a few carefully considered stocking stuffers.