Sunday, February 26, 2012

How bad is giving gifts?

The more I learn about it and the more I think about it, the worse I think it is. At least in the most general aggregate sense but also often on an individual level. Here is my last post on this. And one before.

I recently finished reading Scroogenomics and learnt some fascinating and other quite horrifying things. Here are a few of my highlights, either quotes or things I learnt:

On average, we value gifts at just 80% of the cost of the gift. Americans manage to destroy a total of around $66 billion dollars per year. In general, people close to us do relatively well, destroying only a little bit of value (parents destroy about 3% and siblings 1%, significant others actually increase value by 2%) and those further away (uncles, aunts, grandparents) destroy between 20 to 25% of the value of the gifts. The average American in 2007 purchased 23 gifts for Christmas! Twenty-three! It's no wonder we destroy so much value. To steal a quote from the book: "... that perfect gift says 'I had no earthly idea what to get you, but chose this particular item because, um, it is shiny and appears to cost what I could reasonably be expected to spend'". We have got ourselves into a social equilibrium where giving rubbish gifts is a necessity. We are crazy! The data by the way, do suggest that gift-giving is a 'necessity good' like basic food. We are socially obliged to give but as a proportion of our income, we give less as we get wealthier. It is also no wonder, we have started to prefer gift cards (now amongst the most popular gift to receive) - they get around the expensive stigma of giving cash (largely reserved for grandparents, who tend to destroy a lot of value by giving gifts).

This estimation of value destroyed is pretty generous since it ignores the opportunity cost. Even if I value a gift at 102% of the cost, would I have chosen to buy that or something else I value at 150% of the cost? It also ignores the estimated 2.8 billion hours of time spent Christmas shopping in America (80% of it by women - believe me, if the time cost had this gender division in a developing country, we would be writing about it).

So here we are merrily giving gifts that no one wants, wasting time and destroying value. But it gets worse. Significantly worse. We do it all on credit. Around two thirds of Christmas shopping is paid for on credit cards and a third is still not paid off two months after Christmas. We are getting into debt to give things to people that they don't want! The 'trade deficit' is larger than it would otherwise be meaning, at some point in the future, we will have to work harder to produce things that, largely, the Chinese want. And I can only hope they are more sensible actually want it. 

Now add to the environmental damage caused by the production, packaging, shipping of all of the crap in the shops over Christmas. I haven't seen an estimation of this but I am pretty sure it is high. Again a nice quote from the book: "It's probably wrong to pillage the planet in celebration of Christmas. But if pillage we must, we should at least do it efficiently".

Finally add the fact that we moan that our health systems should be better or education should or transport or we should give more aid to poor countries or we pay too much in tax, and it gets even worse! When we choose to buy crappy presents for people, we are sending a message to the market. No, I don't these resources to be used for an extra nurse or teacher; I want them to be used to produce something shiny and stupid to give to someone who will throw it away. What is wrong with us?!

All this is on a macro, economic level. I can't help but find it sickening on a micro level too. Tales from the Hood wrote a wonderful blog a few weeks ago (but has unfortunately closed up his amazing blog to the public recently). He called it 'more blessed to give than to receive' and makes the interesting observation that the US turned down help from Bangladesh following Hurricane Katrina. Seriously? Could there be a country with better expertise at dealing with the aftermath of flooding? But the US just couldn't bring itself to say yes. The focus of his blog comes from the final episode of NBC's Law and Order. In it a woman may have cancer. She makes very, very clear that does not want sympathy or help. But her colleagues just can't help themselves. Her boyfriend realises she does not want their sympathy or help but admonishes her and says that she should accept it for them. Imagine! A woman dying of cancer is expected to do something for the other people because she has cancer. She should make her life, already pretty shitty, even worse, so that theirs are better. It really drums in who we give for. We give for the giver. Not the receiver. 

Giving has become an inherently selfish act in the way in which it happens in our society today. I don't think it has to be this way. But we need to dramatically change how we give for this to be the case.

I personally think a good start would be to buy fewer gifts and only do it for people you *really* care about and are close to. Secondly, don't give when society mandates it. Give randomly (the surprise must have some value, right?) and when you find something someone might actually like rather than struggling to find something when society tells you you must. In the sense of doing "good" things, probably sometimes we should learn that less can be more. Humans always want to do 'something' but unless we know what we are doing we are as likely to do bad as good. Try not interfering sometimes! Scroogenomics has some ideas too. You should read it.

Finally, thank you to everyone who respected my wish not to be given presents at my last birthday. Especially those who might have felt socially pressurised or emotionally obliged to give me something. You gave the best presents of all :)

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