However, most families celebrating this ritual have a strange and, as I will show, troubling thing in common: They exchange gifts! There are good (economic) reasons for the persistence of this practice, but there are also motivations that might lead to an impoverishment of human relationships.
Many of you probably share my basic conviction that cash is the most efficient way to transfer value from one person to another, as it preserves the full choice of item and time of consumption for the receiver. That is, when a relative or friend of mine buys a gift for me — say a historic novel — that I would not have bought for myself if given the money to do so, it indicates that I value it below its price tag and someone else buying it for me does not eliminate this waste for the economy as a whole. Imagine my puzzlement that nonetheless, physical items as presents seem to be all the rage year after year and cash gifts are looked down upon as inappropriate in many interpersonal relationships.
Of course, this strange phenomenon might have a good economic basis: I might not actually be able to buy the item, as I assumed, because it may only be available in a far-away country and the gift-giver is merely assisting me in the purchase by lowering my transaction cost so that I do not have to fly to Peru myself, for instance, to buy a colorful native cloth woven by indigenous people. Moreover, an efficient division of labor might be involved when people with very high wages, such as businesswomen, buy high-priced items requiring very little shopping time, such as toys, for their recipients, while those with a low price tag on their wasted time, such as children, provide a time-consuming but low-monetary-cost service in exchange, such as hand-painted mugs. This is sort of like international trade, with the difference that if it were the same, antiglobalization activists would picket Santa Claus’ house demanding that he stop asking whether the children were good this year.
Another good reason for the Christmas-induced spending binge is its use as an efficient way to counteract our psychological bias in favor of short-term desires: The book or fitness studio vouchers we receive might be a way for our families to prevent us from using any money we receive on such harmful substances as burgers and beers. However, the rational gift receiver might simply devote some of the money that he now saves on books and fitness to buy burgers and beers anyway.
Strangely enough, sociological research shows that some cynics deny that these efficiency aspects of Christmas are paramount. Trying to bring economics into realms where it does not belong, they want to make these materialist transactions the basis of emotional relationships — in fact, they insist that “it’s the thought that counts,” confusing purchase decisions with true signs of affection. They insist that devoting time and money to buying a gift and choosing an appropriate one signal caring and intimacy, respectively. Of course, this is absurd. First, it is well known that time equals money, and that higher incomes permit more expensive gifts. Thus, the former is equivalent to ranking people by their wealth and befriending only the top-grossing individuals. As regards knowledge of the receiver’s preferences — besides being unreliable as a signal of intimacy because it can easily be acquired from other sources — the desired signal could be delivered without the economic loss: The cash transfer need simply be accompanied by a note that states, for instance, “I know that [obscure object] would suit your character very well. If you agree, consider buying one. Merry Christmas from Gregor.”
However, the most problematic aspect of these monstrous attempts at tainting the economic purity of Christmas transactions by making them the basis of love and friendship is their pernicious effect on the possibility for real signals of such relationships: By concentrating signs of appreciation on the “holidays” — the approach of which no person without severe sensory deficiencies could possibly miss — they reduce them to a shallow recall of formulaic niceties that say nothing whatsoever about the amount of thought devoted to another individual on a regular basis. In this respect, Christmas is only rivaled by Facebook-era birthdays.
True human affection should be a continuous and calendar-independent flow of generosity, and I hope that this year we will fight to abandon the cruel practice of Christmas gifts. While there might be an economic rationale for these transactions, the human cost of such materialist emotional impoverishment is simply too great for those of us with kind hearts to tolerate.
Gregor Schubert is an economics major from Leipzig, Germany. He may be reached at gregors@princeton.edu.
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