If Christmas didn’t exist, would we have to invent it?

Last updated on: December 31, 2015 at 8:30 am by Jane the Actuary

If Christmas didn’t exist, would we have to invent it? 2015-12-31T08:30:31-06:00 Jane the Actuary

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By which I mean not the celebration of Christ’s birth, but the orgy of shopping.

I should start by saying that in our household, we don’t do much: we, that is, my husband and I, buy things for the kids that they will enjoy, and, hopefully for more than just one afternoon. If it’s beneficial for them, that’s a bonus. And the kids buy small things for each other, and my husband and I buy modest things for each other, sometimes off a list, sometimes things we would have bought for ourselves otherwise, nothing huge because the big-ticket items are mutual decisions, and we don’t have a practice of justifying something as “a Christmas present for ourselves.” Mom buys things for the kids, and my sister does, sometimes (depending in part on her finances at any given time, and a certain arbitrariness about it, and we certainly don’t expect her to feel obliged to do so), nothing big-ticket; for a few years we bought for my niece and nephews and my brother and sister-in-law bought for our kids, but we abandoned that practice. And we don’t have a practice of buying for all the friends, neighbors, co-workers, acquaintances, and service providers in our lives.

But according to the National Retail Federation, based on consumer surveys, the average adult planned to spend almost $600 in Christmas gifts, and just over $800 in “total holiday spending” (that is, decorations, candy, etc.). And the “holiday shopping season” — defined as November and December, is understood, by conventional wisdom, anyway, to be the crucial period for retail sales, so much so that the American economy is dependent on Americans shopping for each other, and buying things they otherwise wouldn’t buy, solely for the purpose of “giving a gift,” such as the trinkets you buy for the Secret Santa exchange at work, or the box of chocolates, or the like. Periodically there are news reports that sales burgeon in part because shoppers, out to find that “perfect gift” for someone else, decide to treat themselves along the way, to a new sweater or pair of boots or whatever it might be.

Would our economy come crashing to a halt if families stepped back, and bought gifts primarily for children and close family?

Surprisingly, the NRF says “no.” Well, not exactly, but do the math. Here’s what they say:

For some retailers, the holiday season can represent as much as 30 percent of annual sales with jewelry stores reporting the highest percentage, accounting for approximately 26 percent of their sales during the 2014 holiday season. Overall last year holiday sales represented 20 percent of total retail industry sales.

Given that they’d elsewhere defined “holiday season” as consisting of two months, or 16.7% of the year, it’s not wildly disproportionate for these two months to represent 20% of the year’s sales.

Now, perhaps if they were more granular, they’d report that sales in the last week before Christmas, or for the month of December alone, are more marketedly higher than the year’s average. But at the same time, this same page says

Each year about 40 percent of consumers begin their holiday shopping before Halloween. While most retailers do not begin holiday advertising until at least October or November, they recognize that many people like shopping early to spread out spending.

Also, the 2015 forecast was for 700,000 – 750,000 seasonal jobs. That’s extra money that many people are happy to earn, but the frenzy to deliver all those gifts ordered on Amazon.com has costs, too, in the form of people obliged to work overtime at the expense of family time, when the same amount of purchases, spread out through the year, would provide more steady work for more people.

Besides which, all this Christmas present-buying produces what economist Joel Waldfogel has called “the deadweight loss of Christmas”; that is, all the Secret Santa exchanges, the gifts purchased for cousins, neighbors, and everyone else for whom you don’t really have a good idea of what the recipient wants, produces waste. In an NPR interview, Waldfogel describes the issue:

Well the deadweight loss of Christmas is just the waste that arises from people making choices for other people. Normally I’ll only buy myself something that costs $50 if it’s worth at least $50 to me. When I go out and spend $50 on you though, cause I don’t know what you like and what you need, I could spend $50 and buy something that would be worth nothing to you.

In that same interview, Waldfogel describes the rise of gift cards as consumers’ attempt to solve that problem in a way that feels less crass and direct than giving cash.

At the same time, if you google this term, “deadweight loss of Christmas,” you get two types of articles. The first, such as summarizes Waldfogel’s concept and updates the reader on additional research that supports it, such as in this Wall Street Journal article, which says that “Gallup predicts Americans will each spend an average of $830 on gifts this holiday season. Mr. Waldfogel expects about 20% of that to be wasted.”

Now, other studies make the opposite claim, that gifts’ sentimental value, the memories and associations that come along with the item, give them more value to the recipients than items purchased themselves. Here’s an excerpt from a Wall Street Journal article,

One study in the series focused on gifts that people received versus things they bought for themselves during the Christmas season in 2012. Over a 45-day period, those self-purchased items—supposedly items for which we get the full bang for our buck—declined in their power to bring happiness.

But gifts did not. If forced to sell them, subjects said, they would ask a higher proportional price for the gifts than for the purchases. Not only was there no deadweight loss, but there was, relatively speaking, a buoyancy over time for the gifts.

But, really, both claims are true, aren’t they? In some situations gifts do come with sentimental value; in others, not.

So if you could reinvent the American Christmas gift-giving traditions, how would you do it, and what would they be?

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