The thought doesn’t count at Christmas – but the present does

It is still possible to add a great deal of value by giving things that the recipient will use regularly and with great enjoyment

It happens every year. Just when minor celebrities are switching on Christmas lights and older folk complaining “it gets earlier every year”, a journalist will cite The Deadweight Loss of Christmas, a 1993 paper by Yale economist Joel Waldfogel. The professor’s estimate was that between $4billion and $13billion a year is wasted in the US through inappropriate gift selection at Christmas. Economists assume that people choose best when they select things for their own use, using their own money, and so believe gift-giving, which involves guessing other people’s wants, creates large-scale inefficiencies.

Research conducted by colleagues of mine rather supports Waldfogel’s case: every year, Brits spend £2billion on unwanted gifts; 70 per cent of us admit to receiving things that we shall never use. As for those products (novelty socks, overpriced candles) bought more often as gifts than for personal use, I’m not sure our world would be poorer without them.

One solution would be to ask people what they want – yet we found givers reluctant to do this. I suspect it looks lazy: as another economist, Alberto Alesina, observed, “choosing a gift is often a signal of intensity of search effort,” which is an economist’s way of saying “it’s the thought that counts”. The same applies to vouchers, which bring the extra problem that you cannot disguise the amount spent. Yet one vital thing our research revealed was that people truly enjoyed giving presents – almost more than receiving them. If this is so, all the economists’ assumptions break down, since every act of generosity creates value twice over – for the giver and for the recipient. There is no such spillover benefit when we buy things solely for ourselves.

Besides, if we do not make the economist’s mistake of assuming people know exactly what they want, it is still possible to add a great deal of value by giving those things that the recipient will use regularly and with great enjoyment, but which they would never buy for themselves.

Elderly people may be disproportionately wary of buying technology products, but love them if given the chance. My wife recently witnessed the joy of a 92-year-old experiencing a microwave for the first time; a retirement home nearby has installed an Amazon Echo Dot, and has found that Alexa is a useful way to provide information to people who may not be able to type.

But I have a friend in New York to thank for alerting me to the most underrated technology of all: small, light-sensitive, motion sensitive, battery powered LED lights. You can buy three online for £10. Place them strategically around your home, and they will turn on only when it is dark and they detect movement. Never again will you bump into furniture in the night, nor wake a household searching for your spectacles. Set them on “dim” and they light your midnight path to the lavatory without the full blaze of a Gestapo interrogation.

Yes, the worst reaction to a present is “it’s the thought that counts”. But the best reaction is “I never would have thought of that.”