If you are reading this article, you have heard on more than one occasion in your life that when it comes to gifts it is the thought that counts. In fact, there are some people who actually found on the giving of cash and gift cards as lacking intimacy and thought. The truth is that some of us are just not good shoppers, others find Christmas shopping to be depressing, and others are simply too busy to get out and get everything for everyone. Well, as it turns out, there may be a benefit to giving out cash instead of buying gifts, at least from an economic perspective.
A growing number of economists are suggesting that giving cash has its benefits. In the story being told by some leading minds in the world of economics, cash has returned to its rightful place as king. There is actually a term to go with this train of thought “Scroogenomics.” I promise you that this is actually a word. Joel Waldfogel, as Professor of Economics at the University of Minnesota, is also the author of Sscroogenomics: Why You Shouldn't Buy Presents for the Holidays.
One might think that it takes a Scrooge-like mentality to erase gifts from the Holidays, however, it has nothing to do with how a person may feel about the Holidays and more about the usefulness of gift-giving beyond the date of gifting. Waldfogel suggests that giving gifts is a huge waste of money, actually referring to gift-giving as an “orgy of wealth destruction” in his book.
Waldfogel suggests that more often than not we end up buying the wrong gift, which ends up underwhelming the person who pretends to like the gift only to take home and underuse it. If there were a way to calculate how many people who will receive gifts that they absolutely don’t this year, we would probably be blown away. The author does admit that gift-giving works best when we are giving them to those we know extremely well like our spouses and our children. It is more likely that we will know what our closest loved-ones want — probably because they will have mentioned it like a thousand times leading up to the Holidays.
Waldfogel’s solution to the problem is to give cash instead. Cash not only has the flexibility to retrieve what a person really wants, but it has a much longer shelf life. According to Annie Leonard, the co-author of The Story of Stuff, approximately one percent of the materials used to manufacture consumer goods are still in use six months after purchase, and this includes the goods themselves. When you think about the resources used to manufacture, package, ship and sell goods only to be out of function in six months, that is not only a waste of money, it is a massive waste of the world’s most precious resources.
I am sure that there will be those who are inextricably connected to the tradition of the holidays who will treat this idea as absolute blasphemy, but the idea is practical and responsible, which is in tall order these days.
American consumers spend an average almost $1,000 on holiday gifts over the holidays. Now consider that 99 percent of that will not even be relevant within six months. While thought does matter, there is very little in the way of responsibility and practicality. The energy, time, and money that is spent on gifts every year are almost completely focused on a temporal feeling that is often one of underwhelming gravity. The truth is that no one can determine what they need more than the person themselves. Instead of attempting to guess as what someone would like, simply give them the money and allow them to choose for themselves.
While there may not be the same level of excitement in giving and receiving cash, there is the consistency and flexibility that it offers after the feeling has subsided that cannot be denied. I will admit that there is nothing like opening gift while wondering what is on the inside; however, I would rather take the money and do something with that will really satisfy me. This is what we should be looking to do during the holidays anyway — help people fulfill their needs and desires.
Written by Garrett Parker
Read more posts by Garrett Parker