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

by Joel Waldfogel

How consumer spending during the holidays generates enormous amounts of economic waste

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, Scroogenomics illustrates 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, Scroogenomics proves that we can still maintain the economy without gouging our wallets, and reclaim the true spirit of the holiday season.

Genres: Nonfiction, Economics, Audiobook, Christmas, Business, Sociology, Finance

192 pages, Hardcover

First published January 1, 2009

About the author

Joel Waldfogel holds the Frederick R. Kappel Chair at the University of Minnesota’s Carlson School of Management. His previous books include Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays (Princeton). He lives in Minneapolis.

Reviews

[Dawn · Rating 4 out of 5]

Waldfogel's point isn't to rant about how overly consumptive and commercial Christmas is, but how inefficiently it redistributes our money. Even though he explains his economic theory with a healthy helping of humor, a lot of it whooshed over my head faster than Santa's sleigh on nitrous. Fortunately, the book is short (and tiny), so there's not too much statistical analysis to muddle through.

Basically, unless you know the person you're buying a gift for really well, you are throwing at least 20% of your money away by buying a traditional present (i.e., cash, a gift card, or something in a box wrapped with shiny paper). Waldfogel's ultimate solution is to save traditional presents for people you know well (like your immediate family), and give charity gift cards to everyone else. Sounds perfectly reasonable to me.

I recommend this book for every grinch and scrooge out there. We've been right all along: nobody likes the crap we give--or get--for Christmas, and everyone else hates shopping for it just as much as we do. Bah humbug, and bring on the charity gift cards.

[Lauren · Rating 2 out of 5]

Possibly one of the most boring books I’ve ever read/listened to in my life. We get it... unnecessary consumerism is bad, gift cards are great profits for the industries, and giving gifts that are of value to the receiver is meaningful for them and the economy. Don’t waste your time reading.

[Donna Craig · Rating 3 out of 5]

Well, this book wasn’t what I expected!
It’s not a diatribe against giving gifts. Rather, the book explores the value of the gifts we give. My family is devoted to the idea of wishlists, and I’ve passed that to my children. Making long lists of various things that interest or appeal to us is actually a fun part of the early holiday season for us. Bonus points for including links!

At first, my children’s partners and other newcomers to the family find it awkward. Perhaps it seems shamefully demanding? However, after a couple of Christmases with the advantage of having lists to shop from and the fun of seeing which suggestions appealed to those who gave them gifts (we do drawings to limit expenses), all have happily joined the practice.

This author’s suggestions turned out pretty good in the end. I was put off by times that he would beat a dead horse or go off on his political agendas. This book was short, but it would have been better if it were shorter. And had fewer statistics and calculations.

[Jules Vilmur · Rating 4 out of 5]

Every Christmas for decades, our mother makes the same speech, which begins like this, “I know that some families go all out and spend big money on big presents, but we’re not one of those families… “ invariably, this is the point where someone will stop her because we’ve all heard the speech enough times that we know it by heart and honestly, there is no explanation necessary for the fact that there is not a brand new car in the driveway with a red bow on top. We have never been one of those families who shops until they drop or maxes out credit cards trying to keep up with the Joneses.

Oh we are not immune to occasional splurges, but our people are frugal by nature and in recent times, by necessity as well. For years, as our extended family grew, we tried all kinds of different ways to control the gift-giving costs. We drew names and each person bought one gift for one other person. I’ll be the first to openly admit that I find that system unsatisfying. All too often, the match-ups were awkward, with son-in-law #1 buying something for son-in-law #2, whom he barely knows and has little in common with and the “family gift” feels like anything but. At another point, the great plan was to set a price limit on all gifts in the family exchange, which might have been more efficient if we just sat around and exchanged twenty-dollar bills.

Examining Holiday Gift Giving from a purely economic standpoint, Joel Waldfogel’s book “Scroogenomics” backs up with statistical data, the sense that I’ve had for the last few years that all the cost and challenges and care we expend during the Season of Giving rarely delivers the joy we hope to impart. I wish I’d read this book when it came out in 2009. It would have saved me two full seasons of guilt, frustration and the kind of holiday stress that so many of us fall prey to year after year. Many words have been written (and you can be sure that there are many more to come) about how to avoid or address the Christmas Blues, but the ones in “Scroogenomics” are by far the most sensible, fact-based and reasonable ones I’ve read in ages. Perhaps ever.

This year, I have officially given up feeling ashamed or embarrassed about the fact that the focus of my holiday season will NOT be on gifts. My ability to buy things for the people I love is not a fair measure of my affection for them, just as some trinket or token is not the best expression of their fondness for me. Living focused on things, whether we are giving or getting them, robs us of that which matters most.. spending time with the people we love, making memories and building holiday traditions that are low on stress and high on long-term, emotional rewards.

[Brianda · Rating 3 out of 5]

Liked the concept, just wasn't as into it as I thought it would be. Thought it was interesting that there's a stigma for cash gifts in all communities except for the Jewish and Chinese ones, who prefer cash gifts on average. Also found it interesting to read this after the four agreements when he talks about how we don't technically have to do these things like buy each other's gifts but there is a societal consequence if we don't.

[Jane · Rating 4 out of 5]

I kind of hate Christmas. I hate the pressure of gifting. Every year I tell myself that I will start shopping earlier to avoid said pressure, but that never ends up happening. I feel the pressure regardless. The pressure to give a thoughtful and meaningful gift, but honestly, I suck at gifts. Pretty much everything Joel says in this books about gifts I agree with. The best gift being cash or gift cards, but apparently it's still not an "acceptable" thing to give bc it's impersonal. Whatevs. If I give you cash or a gift card, it doesn't mean I don't know you, it means I want you get something you actually WANT that you will actually USE.

[Amanda · Rating 3 out of 5]

While I thought this book was interesting I feel like it was lacking something(s): graphs and charts. The author throws out a lot of numbers, and I think they would be better explained if there were graphs and charts to go along with the numbers. I took two beginning economics classes in college (micro- and macroeconomics), and charts and graphs are a big part of those classes.

I like the idea of giving gift cards, and as someone who likes giving and receiving gifts, I've think experience gifts (something you do with another person, such as getting coffee, pedicures, or going to the movies, etc) are the way to go, which also don't contribute to the gift giving waste discussed in the book.

[CB · Rating 3 out of 5]

Although I'm strongly in favor of charitable giving, I disagree that giving to charity in the name of your intended recipient makes a good Christmas gift. Better to contribute toward that person's personal retirement savings or college fund. At least for the middle, lower middle, and low income households where such expenditures may have fallen by the wayside.

[Jessica Zhu · Rating 4 out of 5]

A good analysis on why gift giving isn't very efficient. Holidays should be about making good memories rather than giving away items that will never be used

[Alexa · Rating 2 out of 5]

I've always known I'm not an economist. Now I know WHY I'm not an economist. I agree with Waldfogel that we don't NEED to buy presents for the holidays, and I find the economic logic interesting (and thought he explained it pretty clearly, considering), but nothing about my brain understands how someone could ever talk about satisfaction, happiness, contentment, etc, in terms of dollar signs. Even given that he's talking about satisfaction with a product, I still can't wrap my head around the casual assumption that a dollar amount can be placed on that.

For example, he talks about iPods. If I buy an iPod for $100, but would have spent $200, but get $300 worth of satisfaction out of it... then, by his reckoning, if I understand him correctly, somewhere along the line society or I or someone has "benefited" a surplus of $100 or $200. He also talks about "cost to society." The iPod "cost" society $100 "to make." But... no. It cost Apple some amount less than $100 to make, and it cost the workers who made it X amount of hardship if they work under poor conditions or for less than a living wage, and it cost the earth some measurable loss of resources, etc etc etc. To make the assumption that the price tag says something inherent about the "cost" of the product doesn't make sense to me.

I'm sure an economist would tell me I've understood this incorrectly, but I can't imagine I would ever be able to *really* understand it, because I think I balk at the very premise that specific amounts can be attached to these realities (the feelings of the buyer, the receiver, the worker, etc).

I don't think any of this is specific to the book--it seemed like he was presenting basic economics lessons within the framework of gift-giving. It's neat, in a way, and it would be a great book if you needed to understand these concepts and found them very dull. I suspect it's far more interesting than economics textbooks...

[Allison · Rating 4 out of 5]

I completely enjoyed this book. Waldfogel gave me what I wanted in this one - scientific PROOF that commercialized Christmas, extravagance during the holidays, guilt-giving, and such is a waste. For nearly two decades I've been trying to convince everyone I know that there should be a "one gift" rule and it's been an uphill battle. I am sorely tempted to purchase a copy of this book for every member of my immediate family (as their Christmas presents this year). If I thought they'd actually read and "get" it, I would. Alas, those who aren't willing to change, won't.

But if you've had a hankering that enough is enough and gift-giving is out of hand, a) You are completely right, and b) read Scroogenomics and have your instincts confirmed with real data. As a bonus, you'll get some suggestions on how to deal with the conundrum that you're left with if you've decided to tame the giving-just-to-give. I don't agree with all of Waldfogel's suggestions but they are thought provoking.

[Ken McDouall · Rating 3 out of 5]

I think there are better arguments for toning down the commercialism and consumption around Christmas. Waldfogel, an economist, brings in abstract concepts such as "satisfaction value," and attempts to quantify some rather intangible characteristics of gift giving. This just proves that economists aren't like the rest of us. But on his argument's own merits, he completely misses the value that giving gifts bestows on the giver--even if the gift itself isn't something especially desirable to the recipient. The book does have some intriguing facts about holiday consumption, and some interesting history. Think that this over-consumption is something new? "There are worlds of money wasted, at this time of year, in getting things that nobody wants, and nobody cares for after they are got." That's Harriet Beecher Stowe in 1850!

[Tim Johnson · Rating 3 out of 5]

The carnage of Christmas is still fresh in my mind. The onslaught starts in October when, before it's even Halloween, the department stores begin to put up their Christmas displays. Hey guys, ever hear of Thanksgiving? Then there's Black Friday, when millions of Americans grab their pepper spray and head to Walmart.

Yes, Christmas in America is commercialized. But not any more than in other Christian countries. Our December sales bump isn't necessarily out of proportion to the rest of the world. Besides, all this spending is good for the economy. And the commercializations isn't necessarily new either. It's been happening (determined by researching sales figures from places like Woolworth's and Montgomery Wards from the 1930s). So there isn't necessarily a significant difference by location or generation. So people can stop saying that Christmas is becoming too commercial in America. That, according to Waldfogel, is not the true problem of Christmas.

Value, however, is another story. When you pay a hundred dollars for a gift that the recipient doesn't like. You have effectively destroyed value. If a bunch of people are buying the same thing that none of the recipients like it equals waste. The human capital and money and raw materials that went into its production could be better allocated elsewhere, to things that benefit society. Decreased value equals inefficiency and waste. Economists hate waste.

If it weren't for a stigma attached to giving cash, that would fix the problem (think of that Seinfeld episode where Jerry gives Elaine $180 and she responds "who are you, my uncle?"). I'm uncertain about my punctuation there but you get the idea. The whole point of cash is that it gives a somewhat stable value for exchange, but that darn stigma!

Gift cards offer some hope. They can be used like cash and don't seem to carry the same stigma. Unfortunately there's still an element of waste. Every year stores reap billions (at least according to Waldfogel) of dollars in unredeemed gift card funds. That's right, in most states they are allowed to just zero out your card after a set period of time.

Anyway, we could all just agree to keep our money and focus on spending time together. Just get gifts for the kids, have dinner together, and drive around and look at Christmas lights. Is there a stigma attached to that?

[Bruce Cline · Rating 1 out of 5]

Scroogenomics, Why You Shouldn’t Buy. Presents For The Holidays, by Joel Waldfogel (audio book, 4 hours). Published 2009. On its face, this study of the economic value of gift giving seemed interesting. It wasn’t, or at least whatever interest was inherent in the work (and thesis) was vastly exceeded by over analysis. In short, this four hour reading could have accomplished as much in fewer than 10 minutes, and quite probably less. Basically, gift giving is an inefficient way to provide value to the the recipient, as measured against what gifts cost. Basically, recipients on average value a gift significantly less than its cost. The author does backflips to explain why people give gifts, including why they don’t give cash which is far for more likely to deliver value closer to the gift’s cost. After much analysis and excess verbiage, he recommends giving gift cards, with the predictable amount of unclaimed value going to charity. If ever there was a book that didn’t need to be written, this might be it.

[Keisha Adams · Rating 3 out of 5]

Not quite the long-winded rant I expected.

Rather than preach about the evils of consumerism, Waldfogel instead shows that unless you are very close to the giftee (and even then) you are likely throwing away money on something they don't really want. Or at least, would not pay nearly what the gift costs. The hours spent shopping with money that could be spent on more worthy causes, or at least more enjoyable ones are instead handed over every year to the same stressful ritualistic bid to prove you care about someone.

His solution if cash must remain unacceptable is gift cards with the remainder donated to charity.

Good luck with that.

I don't disagree, but without taking into account the reasons why people give and if cash/cards fulfill the same psychological effect, change is unlikely. But maybe I'm too pessimistic. I'd love to see the day when I don't have to scramble to find gifts for people who make more money than me, or worse, come up with ideas for items I want.

[Popup-ch · Rating 4 out of 5]

Giving gifts generates egregious grief.

A serious look at the cause and effect of gift giving, according to the dismal science. In most cases Christmas gift giving generates significant waste, when the giver spends a lot more on an object than the receiver would value it at. (If he did value it higher, he would probably already have bought it.) There are cases when gift giving creates value - especially when the giver knows the receiver well, and can anticipate his/her appreciation of a gift - such as e.g. a book or something that the receiver wasn't aware of. But in most cases giving cash would be even better. Unfortunately there's a strong stigma against giving cash in today's world, even though there's a promising trend whereby gift cards are

[Nita Schmidt · Rating 3 out of 5]

Das Buch enthält einige schlüssige und für mich neue Argumente gegen Weihnachtsgeschenke. Leider fokussiert sich der Autor ausschließlich auf Gründe der wirtschaftlichen Effizienz. Es ist also keine Kritik am Konsum, sondern eine Kritik am ineffizienten und dummen Konsum (Geschenke, die nicht gefallen). Es ist sicher ein wichtiges Argument gegen Weihnachtsgeschenke, dass die meisten den Beschenkten noch nicht einmal gefallen. Doch für mich ist dieses nur ein Argument unter vielen weiteren, die in dem Buch leider nicht behandelt werden. (Kritik am Konsum, Kritik an Weihnachten als Alibi für Geschenke, Kritik an Weihnachten als sinnentleertem Brauch etc. etc.)

[Elizabeth Mosley · Rating 4 out of 5]

In spite of the cuteness of the book (it's really small) and the cleverness of the title, don't let this little book fool you. This is a serious economic analysis of the deadweight loss resulting from the inefficiency of gift-giving. Economists and wonks will love it (maybe even as a gift), but for everyone else, it will probably be a dense, dry read. Short version- most gift-givers do a terrible job of predicting what gift recipients actually want, resulting in waste.

[Chris Boutté · Rating 5 out of 5]

This was such a good book. This economist breaks down what we’re all thinking about Christmas and provides some legitimate practical solutions that could not only help us waste less but to make this world a better place.

[Barbara Wylie · Rating 2 out of 5]

The book is very redundant. Everything that needed to be said about this topic was said in chapter 1. I listened to all of it in audio format and finished it because it was short…but it lost its appeal after the first 30 minutes.

[fren · Rating 4 out of 5]

I agree. I'm sure it's worse these days with a decaying monoculture and online retailer dominating the consumer space.

The language in the book really fits the 2000s. Some of it age didn't well and caught me off guard.

[Skyler Jordan · Rating 5 out of 5]

Consider this my holiday gift to you.

“A specter has been haunting the rich economies of the West, and that specter is wasteful gift giving. Gift givers of the world unite. You have nothing to lose but deadweight loss and a world of satisfaction to gain.”

[Estelle · Rating 3 out of 5]

Outdated data, updated idea.

[Lauren · Rating 1 out of 5]

I like the concepts but the details were hard to digest considering I know little about economics.

[Judi · Rating 3 out of 5]

Economics at a personal application rate... eschews materialism in search of the most good. Excellent.

[Pamela · Rating 3 out of 5]

A light approach to an economic conundrum. An interesting solution presented at the end.

[Tiffany · Rating 5 out of 5]

Great break down on issues and solutions to improve giving and reduce waste!

[Sarah Aspacher · Rating 3 out of 5]

I had a hard time finishing this book even as tiny as it is but I appreciated the economist spin on a simplified Christmas.

[Vani · Rating 2 out of 5]

Heard the author on the radio several years in a row now so I thought I'd give his book a try. I got way more from the broadcast. Book is very scholarly. LOTS of statistics. He doesn't touch on the positive "cost" associated with the happiness of giving as I'd hoped.

[Dallin · Rating 2 out of 5]

Seemed uninterested in exploring the pscyhology and ethics of gift-giving. The book seemed very self-satisfied that it was cancelling Christmas.