Article is a couple years old, but seems relevant at this time of year: You Shouldn't Have: The economic argument for never giving another gift. An Excerpt: This article doesn't even mention the transaction costs associated with returns. In America, at least, it's considered tacky to give cash. And while gift cards have gained acceptance, they limit options and often come with strings attached (merchants love them, however). So, in a consumer-driven economy (and one in which many holidays are VERY commercialized), what do you all think of the tradition of gift-giving - good, bad, or indifferent?
Advertising has been mightily effective at kicking rational economic man into touch. But its not necessarily good at creating the consumption splurge (with too much cross-substitution of products which do not increase overall available profit). Coca-Cola Santa is then perfect. Even giving an excuse to generate post-splurge sales riots
I've always thought of gift giving as signalling how well you know the person. For instance, you give someone you know well a gift you know they would like, to show how well you know them. Someone you know less well you give a gift card to show you at least know where they would shop. Thus, the deadweight loss of Christmas may not be so bad after all, because we now know who our true friends are. This can explain why it is tacky to give gift cards and cash, you haven't proven how well you know the person! For this reason, especially when buying gifts for close friends, I put a lot of effort into gift giving. Haven't thought about the credit argument before. The waste could also have good Keynesian stabilization reasons, where we cannot assume it would've been spent otherwise, like the article does (see the aunt Mildred section).
Don't tell my missus whatever you do! Cash'n'perfume is the only thing that saves me from the consequences of a lack of imagination
