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Why (some) economists hate Christmas gifts

Economists (or at least the more Grinch-like ones) have long complained that gift giving is a fundamentally inefficient activity. In economics, efficiency means that you’re sharing around resources, like money or reindeer socks, in whichever way creates the most value and least waste possible. Essentially, economists want you to gift those reindeer socks to your uncle that enjoys wearing novelty footwear year-round, rather than your too-cool-for-school niece who will immediately chuck anything that kitsch in the nearest bin.

Plenty of people would agree that this sounds sensible enough, at least in theory. Indeed, in the early 20th century a group of American women set up SPUG, or the Society for the Prevention of Useless Gifts, to push back against the purchasing of what they saw as pointless tat for Christmases, birthdays and other celebrations. Interestingly, a key dynamic in SPUG was working-class women who were fed up of being pressured to contribute to presents for their bosses. While they didn’t quite word it this way, they were echoing the idea of economic inefficiency by pointing out that the money they contributed to an unwanted desk plaque or whatever could have been better spent providing for their own families.

The thing is, though, that most of us are really quite bad at knowing what other people do or don’t like. So unless we stop giving presents altogether, inevitably a high percentage of them are going to be unwanted and end up being chucked out or left to gather dust. For some people, though, that doesn’t matter. Gift giving, they point out, has more value than how useful the present is to the recipient. Gifts are also a social signal that we care about someone, which can make them feel happy and appreciated even if they absolutely hate the lumpy sweater we’ve knitted them.

Read our explainer on: rationality.

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