Give loved ones the gift of cash this Christmas
A padded envelope seems like a cop-out, but it might actually bring the most festive joy.
‘ From an economist's point of view, Christmas presents are very wasteful.’
GIFT cards are impersonal and tacky and lame and thoughtless – and I love them.
What I don’t love is being burdened with random stuff I don’t want, or having to pretend I’ve always dreamed of owning a chunky mauve sweater. Apparently I’m not alone in this; some research suggests most people would prefer to get a gift card than an actual present.
When it comes to the nearest and dearest, gift cards are definitely a cop-out. You should know them well enough to get them something they’ll enjoy.
For people you don’t know intimately, they’re nothing less than a godsend, especially when Christmas is fast approaching and there’s a million other things on your to-do list.
The concept is great but there are drawbacks. Consumer NZ’s number one beef is the expiry date. Every gift card or voucher left in a drawer too long becomes pure profit for the retailer, to the tune of up to $10 million a year. Having reviewed 60 gift cards, Consumer found more than half expired after a year.
Another disadvantage of gift cards is that you don’t usually get change. Unless you spend the exact amount, you’ll either waste a few bucks, or have to spend more of your own money just to get your gift.
Then there are the weird exclusions – I remember one person who received a voucher for a gun store, but couldn’t use it to buy a gun. Finally, the voucher can become worthless if the business goes under, as we saw with the Dick Smith debacle.
Consumer NZ has called for a boycott on gift cards until retailers address the timing issue. Countdown, Kathmandu and Noel Leeming have agreed to remove expiry dates, which is a great start.
Even if the rest of the industry refuses to follow suit, I have a better alternative.
At the moment, we’re giving people a $50 note that crumbles into ash if they forget about it for a year. Let’s just give them a literal $50 note. It’s barely any less personal than a gift card, with none of the downsides. Other cultures have no qualms about giving cash, and for good reason.
From an economist’s point of view, Christmas presents are very wasteful. When we buy things for ourselves, they’re worth at least the dollar price to us, if not more. When we buy things for others, they probably won’t value them to the same degree. Maybe we shelled out $100 on something they would only have paid $30 for. The remaining $70 is what economist Joel Waldfogel calls ‘‘deadweight’’ loss. In a famous paper, he figured the average Christmas gift is anywhere from a tenth to a third deadweight.
‘‘We are able to choose gifts well only for people we know really well,’’ he writes. ‘‘With everyone else, we might be better off giving cash or gift cards.’’
Waldfogel lives in America, where gift cards don’t expire for five years, if they expire at all. Unless New Zealand retailers get their act together, I suggest cold, hard cash is the better option to 123rf slip in the stockings this Christmas.
Email Budget Buster at richard.meadows@thedeepdish.org, or hit him up on Twitter: @MeadowsRichard.