Scroogenomics: Why You Shouldn't Buy Presents for the Holidays

Copyright Date: 2009
Pages: 186
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  • Book Info
    Book Description:

    Christmas is a time of seasonal cheer, family get-togethers, holiday parties, and-gift giving. Lots and lots--and lots--of gift giving. It's hard to imagine any Christmas without this time-honored custom. But let's stop to consider the gifts we receive--the rooster sweater from Grandma or the singing fish from Uncle Mike. How many of us get gifts we like? How many of us give gifts not knowing what recipients want? Did your cousin really look excited about that jumping alarm clock? Lively and informed,Scroogenomicsillustrates how our consumer spending generates vast amounts of economic waste--to the shocking tune of eighty-five billion dollars each winter. Economist Joel Waldfogel provides solid explanations to show us why it's time to stop the madness and think twice before buying gifts for the holidays.

    When we buy for ourselves, every dollar we spend produces at least a dollar in satisfaction, because we shop carefully and purchase items that are worth more than they cost. Gift giving is different. We make less-informed choices, max out on credit to buy gifts worth less than the money spent, and leave recipients less than satisfied, creating what Waldfogel calls "deadweight loss." Waldfogel indicates that this waste isn't confined to Americans--most major economies share in this orgy of wealth destruction. While recognizing the difficulties of altering current trends, Waldfogel offers viable gift-giving alternatives.

    By reprioritizing our gift-giving habits,Scroogenomicsproves that we can still maintain the economy without gouging our wallets, and reclaim the true spirit of the holiday season.

    eISBN: 978-1-4008-3125-8
    Subjects: Business, Religion

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. Preface
    (pp. ix-xii)
  4. CHAPTER ONE Introduction
    (pp. 1-5)

    Every December brings the same nightmarish vision. It begins at a deserted mall stacked with a million dollars’ worth of products. Customers form a perimeter a thousand feet outside the mall. Then, out of nowhere, a red tornado strikes—just the mall and not the crowd—and lifts the clothing and appliances and books and DVDs into the air. As quickly as the cyclone landed, it rises back up to the sky. Then the products rain gently down on the crowd.

    “Hey, I got a toaster,” says someone in the crowd.

    “Look, I got a red sweater, not my size...

  5. CHAPTER TWO Spending and Satisfaction
    (pp. 6-22)

    Advanced decadence is supposed to be a clue that the End is near. When Romans were holding orgies in rooms with an en suite vomitorium, you could guess that Rome would fall. Walk through a major department store during December. The aisles are blocked not just with panicked shoppers but also with tables covered with “gift items.” In the aisles near the men’s clothing department, you’ll find lots of golf-themed knickknacks—mugs festooned with golf balls, golf club mittens, brass tees, and so on. Would anyone buy this stuff for him- or herself? Does anybody want it? I’ll hazard a...

  6. CHAPTER THREE U.S. Holiday Spending
    (pp. 23-28)

    Theory and common sense suggest that recipients will typically not enjoy their gifts. Yet spend we do! We can measure holiday spending in a variety of ways. The U.S. National Retail Federation (NRF) measures “holiday retail sales” as retail industry sales that occur in the months of November and December. Retail industry sales comprise most traditional retail categories including discounters, department stores, grocery stores, and specialty stores, and exclude sales at automotive dealers, gas stations, and restaurants. In 2007 the NRF forecast holiday sales of $474 billion.

    While the NRF approach sensibly excludes expenditures on gasoline—who gives gas as...

  7. CHAPTER FOUR How Much Waste Occurs at Christmas?
    (pp. 29-40)

    Waste, particularly when perpetrated by government, has enemies. For example the nonprofit U.S. group Citizens Against Government Waste, an outgrowth of the Reagan-appointed Grace Commission, scours the annual federal budget looking for programs of dubious value, with benefits below their costs. Their careful review revealed $17.2 billion in waste, which they reported in their annual “pig book” on the 2008 budget. Dubious programs totaling $17.2 billion are a legitimate reason to be mad at Uncle Sam. But the government waste that CAGW identifies pales in comparison with Christmas, so they should save some of their anger for Santa Claus.


  8. CHAPTER FIVE Why We Do It: Are Gift Recipients Crackheads, or What?
    (pp. 41-56)

    There are three basic economic reasons to give people stuff. The first, recalling Robin Hood, is to take from those who do not need and give to those, like our poor relations, who do. We call this “redistribution.” The second, recalling the way parents treat kids and governments treat crackheads, is to promote sensible consumption choices.Wear a hat. Get a prostate exam. Have some soup, rather than IV drugs. We call this second motive “paternalism.” The third motive, to make recipients as satisfied as possible, is the way we treat loved ones whom we trust to make good choices....

  9. CHAPTER SIX Giving and Waste around the World
    (pp. 57-70)

    Americans have a worldwide reputation for excess. We make up only 5 percent of world population, yet we consume a quarter of the world’s gasoline, complaining bitterly about gas prices even as we pay about half what Europeans pay. We’re well known for excess in other areas. We drive big cars. We live in large houses on large plots of land sprawled far from city centers (hence the need for all those cars). Finally, we’re fat. According to the World Health Organization, 32 percent of American men, and 38 percent of women, were obese in 2002. The only countries ahead...

  10. CHAPTER SEVEN A Century of American Yuletide Spending
    (pp. 71-77)

    We tend to think that American grownups of the early and mid-twentieth century were serious, hardworking people who built the country into a world power. The twentieth century of popular imagination was peopled by the “greatest generation,” men who—literally—soldiered on and saved the world without grousing about their feelings. And for much of the twentieth century U.S. women devoted their labors to the domestic front. With the combination of serious men and hardworking women at home baking cookies for the holidays, Christmas surely could not have been the commercial extravaganza we have made it.

    Or was it?


  11. CHAPTER EIGHT Have Yourself a Borrowed Little Christmas
    (pp. 78-88)

    As we’ve seen, the high volume of spending on Christmas is not a new phenomenon. But what about the way we pay for it? Americans have become debt junkies in the past half century. Has this changed the way we finance Christmas expenditures? And can we actually afford contemporary Christmas?

    Remember “layaway”? How about “Christmas Club”? These are words not often heard these days, but they were once important retail institutions. Both allowed consumers to pay for Christmas gifts in advance of obtaining them, making them the polar opposite of today’s preferred time pattern of buy now, pay later, using...

  12. CHAPTER NINE Is Christmas Like Spam, Underwear, or Caviar?
    (pp. 89-98)

    “What would I buy if I had more money?” is a common parlor game for middle-class Americans. For many, it’s travel. For others, fancy cars or electronic toys. The television showsLifestyles of the Rich and Famousand MTV’sCribsgive viewers a glimpse of the material pleasures of wealth, providing a voyeuristic answer to the viewers’ question “What would I buy if I had a lot more money?” If I were an uneducated nouveau riche athlete or musician, anyway. And we know fromCribsthat hip, rich celebrities buy lots of fancy cars, as well as indoor basketball courts...

  13. CHAPTER TEN Christmas and Commercialism: Are Santa and Jesus on the Same Team? If So, Who’s Team Captain?
    (pp. 99-103)

    A Seattle-area resident named Art Conrad, feeling that “Santa has been co-opted by our corporations as a symbol of consumerism,” and that “[e]very year Christmas comes earlier and earlier,” got fed up and erected Santa-on-the-cross in his yard to protest commercialization during the run-up to Christmas 2007. Art Conrad is not alone in his dismay at Christmas; Yuletide dissidents tend to display their concern over the excessive commercialism of Christmas in one of two ways. In one corner we have Art Conrad, the pope, environmentalists, and various Protestants condemning massive consumption at Christmas that, variously, distracts people from the true...

  14. CHAPTER ELEVEN Stop Carping; It’s All for the Best
    (pp. 104-112)

    In Voltaire’sCandide, Dr. Pangloss is an inveterate optimist and a precursor to the economic Pollyannas who see only the best in whatever happens. One might, for example, view the common human need for vision correction as a pathology. But for Dr. Pangloss, the status quo is all for the best: noses are proof that humans were intended to wear spectacles. ThroughoutCandide, despite many obstacles, Dr. Pangloss maintains that “all is for the best in this best of all possible worlds.” Voltaire conceived Pangloss as a device for mocking optimists such as the followers of the philosopher Leibniz, who...

  15. CHAPTER TWELVE Making Giving More Efficient with Cash and Gift Cards
    (pp. 113-119)

    Nature abhors a vacuum, and the economy—am I projecting here?—abhors waste. So, as we’ve seen, older and distant relatives have always gotten special dispensation allowing them to give cash without creating feelings of awkwardness. And because so much money is on the line, custom has traditionally allowed newlyweds to specify precisely what they want, through wedding registries, effectively turning all gifts into cash. But what about the rest of our giving? Where’s the special dispensation allowing the common man to give cash? It’s come in the form of gift cards.

    While handwritten gift certificates have existed for a...

  16. CHAPTER THIRTEEN Giving and Redistribution
    (pp. 120-133)

    Gifts from those with plenty to those with little can increase society’s net satisfaction. This stems from a fundamental idea of economics, that as you get more of something, you get tired of it. The idea, called “declining marginal utility,” can be amusingly illustrated with a bunch of bananas and a willing volunteer. Indeed, I do this exercise every year in my Wharton class after finding a volunteer who is still willing to participate after learning that the subject must like bananas, must not embarrass easily, and must have eaten breakfast that morning. “Come to the front of the classroom....

  17. CHAPTER FOURTEEN Solutions—Making Gift Giving a Force for Good
    (pp. 134-146)

    OK, Mr. Smart-Guy economist. They don’t call it the “dismal science” for nothing. Thanks a lot for ruining Christmas. Do you at least have any sage advice?

    I do, but before offering it, I am reminded of an old joke about European stereotypes: “Heaven is a place where the police are English; the chefs are Italian; the car mechanics are German; the lovers are French; and it’s all organized by the Swiss. Hell is a place where the police are German; the chefs are English; the car mechanics are French; the lovers are Swiss; and it’s all organized by the...

  18. Notes
    (pp. 147-170)
  19. Index
    (pp. 171-174)