Is gift giving a waste of resources? Or maybe something that makes you particularly happy and strengthens relationships? And it also benefits the giver? Economists also have nuanced contributions to make in defense of gift-giving.
Christmas at the Munot watchman Scheidegger in Schaffhausen. In the tower apartment, on December 24, 1958, the sons of the tower keeper are playing with their gifts, a crane, cars, a locomotive and a motorbike with a driver.
It certainly applies to the shining eyes of children: Christmas without presents would only be half as nice. Adults, on the other hand, often discuss whether the ritualized giving of presents at Christmas makes sense or should be avoided. The stress and problems of finding the right gift would not exist if you agreed not to give gifts.
It’s easy to say that giving is to be. But hand on heart: Isn’t there too much joy, doesn’t it mean that you lose the deep thoughts that you usually have about family and friends? It’s probably no coincidence if your friend or sister can’t quite let it go, despite all the serenity.
When we decide for the others
At first glance, giving presents at Christmas is clearly inefficient. Giving each other Christmas presents is a kind of bartering. We have long known from economics that bartering is a costly waste.
Finding the right goods is much more difficult than exchanging money with which the other can buy exactly what they actually want and need. The houseplant that I have always wished for takes work and soon withers, but it never got the roses.
In a way that is as much quoted as it is controversial Article in the leading economics journal “American Economic Review” (“AER”) the American economist Joel Waldfogel comes to the conclusion that it is a great, value-destroying waste when someone else decides what the recipient needs when it comes to Christmas presents. Waldfogel believes that the gifts are worth between a tenth and a third less than the money that went into buying them for the recipients.
So is it better to give money away or just give it up and use the money saved for yourself?
Gifts can create new values
Not really. Because the popular wisdom that small gifts keep friendships going and the recipients are particularly happy is no coincidence. So are the two economists John List and Jason Shogren in one too commentary published in the «AER» came to the conclusion that in their experiment, recipients overestimated the value of gifts by a fifth to a third. Seen in this way, gift giving suddenly no longer appears as a waste, but as something that quite simply creates enormous value.
Two economists, three opinions? Not quite either. The supposed contradiction can be resolved. Gifts have not only a material but also an immaterial value. They convey appreciation, possibly even affection, and thus delight and motivate the recipient beyond the material value.
The behavioral economist André Maréchal, who works at the Department of Economics at the University of Zurich, has carried out experiments and summarized the illuminating results with two co-authors again in the «AER» can publish. Although the economists are not concerned with Christmas presents, they do show that an employer can achieve a greater effect with a present than with a wage increase.
Intangibles count
In the trials, hourly workers were hired to catalog books in libraries for a set period of time. After the first day, they were surprisingly presented with a thank you in recognition of the job well done. Some received 20 percent more salary, others a thermos bottle of the same value, nicely wrapped as a gift.
Lo and behold, the group that received the pay rise increased their productivity by 5 percent (much less than the 20 percent increase in costs). The gift of a thermos bottle, on the other hand, motivated an average increase in productivity of 25 percent.
The increased motivation and performance was maintained even when the recipients (who did not know they were part of an experiment) were subsequently informed of the value of the gift. What’s more, if they were offered to exchange the gift for money, four-fifths did so, but they remained highly motivated. It’s obviously the thought, the appreciation associated with a gift, that counts. So there’s no reason to mourn if the recipient brings the gift back to the shop after Christmas.
The immaterial value remains. It offers more than the purely pecuniary, as does a follow-up experiment by Maréchal et al. has shown. It differentiated between money that was simply paid out and money that was presented in elaborate packaging as a thank you. The latter resulted in a productivity boost that was not statistically significantly different from that of the gift bottle.
Experiences and vouchers also serve the purpose
Gifts can therefore give many recipients more pleasure than they cost the giver, because they express appreciation and create community. This also explains why giving gifts from joint excursions or experiences is often particularly appreciated.
Vouchers can also serve the purpose well if the giver hands them over and it is clear that he or she has thought of something. If, contrary to expectations, they do not meet the taste of the recipient, at least the publisher who sold something that will never be redeemed will be happy about it.
And last but not least, Christmas gifts not only make the recipient happy, they also make the giver happy. A broad economic literature has dealt with the “Joy of Giving”. People are happier when they make others happy (or at least think they are).
The homo oeconomicus cooperates and is altruistic
That showed, for example an experiment with students in Canada and South Africa. They could either receive the wages for their work in the form of money themselves or give it to sick children in a nearby hospital as a gift. Those who gave gifts felt significantly happier afterwards than the others.
The joy of giving presents illustrates on the one hand that the homo oeconomicus is not just an egoist, but that many people are willing to go to some trouble to behave in a cooperative manner – even if it is to look for gifts.
Often people are even just plain altruistic. This is shown not least by the donation system. Those who save and donate money for children in Africa or starving people in Afghanistan can hardly expect anything in return. Nevertheless, the willingness to donate is great and shows that many people feel the need to give something or to help others. Economists add the keyword “effective altruism» at best, that doing good should be done as well as possible, i.e. it should be as effective as possible.
In any case, altruistic giving is a Christian trait in the spirit of Christmas. It would be a shame to give it up entirely. Not only because the retail trade would then lose the most important business of the year, but also because it makes sense from a behavioral point of view.
And if your friends absolutely don’t want Christmas presents, you might be able to make a donation for them. They would have acted in a Christian, neighborly manner and, above all, economically. Merry Christmas and Happy New Year!