Posted by Abe Sauer on November 27, 2009 02:07 PM
Nothing says "optimistic holiday cheer" better than "economics." And by "nothing" I mean "everything." The dismal science is living up to its name by determining the "destroyed value" of all this wasteful holiday gift giving.
Joel Waldfogen, a University of Pennsylvania Wharton School economist (known around campus as Professor Bringdown), has researched gift giving and determined that, economically, it is dumb. Very, very dumb:
Well, the problem is, you know, normally we go out and buy things for ourselves, we'll only spend $50 if we find something that is worth at least $50 to us. But with gift giving, it's entirely different. You know, we're operating at an enormous handicap. We don't know what the other person wants or needs, so if I spend $50 on you, I might buy something that you wouldn't pay anything for.... I've asked people: How much do you value the stuff you've received as gifts? And what do you think the giver paid? And I've also asked them the same questions about items they've purchased for themselves. The answer I've come to is that people value stuff that they've received as gifts 20 percent less per dollar spent than stuff they buy for themselves. So multiplying that 20 percent times that $65 billion [spent] gets to you about $12 or $13 billion a year in destroyed value, or missing satisfaction in the U.S.
But, thankfully, it's not just an American thing:
Worldwide, the number is about twice that big.
Of course, an economist would also point out that despite the value destroyed by gift giving, there is a great deal of economic value created through the Ponzi-scheme-ish economic benefits of increased consumer spending on these very gifts that make little economic sense. That is to say, if everyone gave cash as gifts, who would need Black Friday, and then who would need pay staff (who would then have no cash to give as gifts)? So... Yay (dismal) science!
For all Black Friday Live! posts go to the Black Friday Live! tag.