Scroogenomics: Why You Shouldn't Buy Presents for the Holidays

There's finally a book out about this topic - Scroogenomics: Why You Shouldn't Buy Presents for the Holidays published by Princeton University Press. Here's an excerpt from an NPR interview with the author:

LUDDEN: So on a personal level, I'm all for saving money. But for society, can you explain what is it about holiday spending that doesn't make economic sense.

Mr. WALDFOGEL: Well, sure. And by the way, I'm not against spending, just sloppy spending. So normally when I go out and shop for myself, I'll only buy something that costs $50 if it's worth at least $50 to me. So with normal spending, outside of the gift-giving context, spending provides some rough measure of satisfaction.

When I'm buying gifts, it works very differently. Now, I'm at a huge disadvantage when I set out to spend $50 on you, because I don't know what you like, and I don't what you already have. So I could spend $50 and buy something that's worth nothing to you. So the problem with gift spending is that it just tends not to produce nearly as much satisfaction per dollar spent as regular spending.