'Scroogenomics' Author Shares Gift Giving Advice

This is how an economist looks at Christmas: "For me, it's resource allocation with the decisions made by someone else. Ouch." That's the assessment of Joel Waldfogel, a professor and Chair of Business and Public Policy at the Wharton School of the University of Pennsylvania, and the author of "Scroogenomics: Why You Shouldn't By Presents for the Holidays."

It's a nifty little book, a quick read, looking at holiday gift giving from the standpoint of efficiency. Are people getting things they like and can use for Christmas? Waldfogel thinks not.

We reached Waldfogel by e-mail to ask him about his philosophy and how it's been received in the midst of the holiday shopping frenzy.

What do you have against presents?
The problem with gifts is that they are so often unsatisfying. Normally, I'll only buy something for myself if it's worth more to me than the price. When you set out to spend $50 on me, you may buy something worth nothing to me. In so doing, you're causing society to miss out on whatever satisfaction that money could have produced.

What kind of feedback have you gotten about the book?
Fantastic. Almost everyone I talk to is tired of obligatory -- and wasteful -- gift giving. So many people are looking for more constructive ways to use resources, including better gifts and gifts to charity. The evidence and arguments I give provide useful fuel to those fires. I am especially heartened by the positive response I've received from people of faith.

Did you start writing this more as an academic endeavor, or was it always meant to be a commercial book?
I wrote the underlying papers -- starting over 15 years ago -- as academic papers. Even then I knew the topics were of interest outside the narrow academic community. I decided to write the book a few years ago to use the annual attention that the work brings to encourage better use of resources at the holidays.

What are the holiday traditions in your own household?
We give gifts, which is OK in my view, as I argue in the book, when you're buying for people you know reasonably well. I know my family well and even listen to them on occasion.

What would it mean to the economy if people stopped buying Christmas and Hanukkah presents?
First off, because many people get pleasure -- joy even -- from giving, not giving would deprive them of that joy. So the first thing lost would be the joy of giving. Second, of course, spending would go down, which is bad for sellers. Whether it's bad for consumers, however, depends on whether the stuff that would have been purchased is wanted. In the extreme, if it were completely unwanted - for the sake of discussion - the consumers (gift recipients) would lose nothing.

How would you fix gift-giving, if you could?
I'd encourage people to keep on giving gifts - as they have in the past - to people they know well and especially to their children. Second, for those situations that require a gift even though you don't know what to get, I'd encourage two things: 1) gift cards -- they allow recipients to choose what they want, and recipients love them, despite their seemingly impersonal nature. I'd like to see gift cards improved, though. Ten percent of their value is never redeemed, and in most states it ends up with the retailer. I'd like to see a new kind of gift card where the unspent balance goes straight to charity after, say, 24 months.

2) charity gift cards as a gift, such as tisbest.org or Charity Navigator's Good Card. One of the things we try to accomplish with gifts is to allow our recipient experience a luxury they don't normally enjoy. We usually interpret this as fancy chocolate. But one of the clearest luxuries in US spending data is charitable giving. So a charity gift card that allows our recipient to choose among a list of charities, allows him or her to act like a rich person -- enjoying the luxury of charitable giving -- while destroying no value. We all get to feel good. Probably not the best gift for an 8-year-old boy. But possibly a great gift for a grown-up.

What's the worst gift you've ever gotten?
Valor prevents me answering this question. Seriously, we're not allowed to talk about this, which is a big part of why the practice of giving unwanted gifts persists.

Have you ever given a gift you thought was perfect only to find out the recipient hated it?
My friends are too polite to have told me. See above.

How do you feel about people buying your book as a stocking stuffer?
It's OK, as long as the giver feels that the recipient would enjoy an economist's "darkly amusing" (George Will), "brief, witty, yet profound" (London Times) take on Christmas. Otherwise, just buy it for yourself.