Company bonuses at Christmas time

Some companies give their employees gift  at Christmas. What a nice idea! It is a little bonus and with gift vouchers you can go out and buy something nice for yourself without any feeling of guilt. You can treat yourself to that little something that you wouldn't normally permit yourself to have. How nice!

At the risk of being bah-humbug: No. Not nice. Stupid for so many reasons.

1. This is how we got ourselves into the current mess. We treat vouchers differently from cash due to mental accounting - money from different sources and in different forms is treated differently from a psychological point of view (I even have a paper on it). We need to be saving more, not consuming more. The same thing happens with credit - we treat credit more like a gift or someone else's money and consume more. The last thing that should be happening now is encouraging more of this consumption behaviour.

2. Gift vouchers are inefficient. You can't do what you want with them. It is possible to save them but then you either have to sell them (for less than their face value on average) or you have to cut on other expenditure meaning they change your consumption habits to something you would not have naturally chosen. A really good form of gift voucher does exist. You can exchange it in lots of shops and you can save it easily. It is called money. The French Government gives money at Christmas, which is more sensible than vouchers but should not be given with the message that this is to buy loads of unwanted Christmas presents.

3. Even presents are dumb. On average, when you give a gift, the recipient values it less than  you paid for it. That is shocking! When you buy something, you must value it at least the amount you pay for it - and probably more. When you give someone a present you are probably reducing the amount of happiness in the world (compared with if you'd given cash or if you'd bought yourself something). I think there is a good reason for this - presents become devoid of a large part of what is supposed to be the personal and nice side when they are given at times they are expected like Christmas. In addition, the pressure means that, quite frankly, you are more likely to buy a crappy present. I much prefer to both give and receive presents randomly and unexpectedly - knowing that someone has thought of me when they didn't have to (so the gift is not expected) and more likely to be something I actually like. It's a sort of consumerism with thought and emotion rather than en masse and under pressure.

A public service announcement from an Economist. Or a counter-intuitive way to make yours and others' lives happier.

(HT: KG)