Christmas presents to please an economist

I’ve been reading these pop economic books recently – stuff that brings economics into concrete aspects of our lives, along the lines of Freakonomics. Turns out that giving Christmas presents is not smart economics. The thing is, for every $1 I spend on your gift, the chances are you only get $0.82 cents worth of utility from it. Bummer!

I can see it’s kind of true – I tend to get a load of junk from loved ones (and not so loved ones) at Christmas.

However, I think I’ve found a way to make economists happy without turning into Scrooge.

What about spending less on gifts? I don’t mean being cheap. What about shopping for Christmas year-round, in order to pick up nice things when they go on sale?

It takes a bit of organisation – you have to keep the things for a few months – but you can get things cheaper, and if you buy stuff as you see it because “this would suit so-and-so rather well”, you'd probably pick gifts better-suited to the recipient than if you were going out last-minute with a long list of names to buy for. I usually find I pay more than I intended for less than I’d hoped for if I have to contend with last-minute shopping.

My sis-in-law has another suggestion – get some utility out of the gift before you give it. No, she doesn’t listen to CDs before giving them away, or wear clothes before wrapping them. Perish the thought. She recently took up a craft, and has been making gifts. That way, she reasons, the recipient gets a gift with a personal touch, and she gets some satisfaction from having made it. The best case scenario is a win-win, and at worst, the recipient isn’t too happy, but at least someone had fun making the gift...

We can also just plain make the gift, whether or not we have pleasure in making it. There’s the home-made food option – jam, cake, jelly, savouries etc. Always useful given the amount of eating that goes on this season. Cuts down on the chances of people not appreciating it – even if they don't like eating the food, they can feed it to visitors.

Hope shopping for the season doesn't make anyone broke. Merry Christmas!