Oh, You Shouldn’t Have. And Here’s Why

Business Week: Oh, You Shouldn't Have. And Here's Why

Wharton School economist Joel Waldfogel has built something of a reputation as a Christmas killjoy. Starting with a 1993 article in the American Economic Review ("The Deadweight Loss of Christmas"), he has been rattling the chains of Yuletide gloom.

Waldfogel says holiday spending is "a massive institution for value destruction." That's economist-speak for the fact that so many gifts—billions of dollars' worth, he contends—match up so poorly with what recipients want or would have bought for themselves. Now, in a new book, Scroogenomics (Princeton University), he puts an updated figure on the waste arising from holiday giving. "U.S. givers spent $66 billion in 2007," he writes, but the value of recipients' satisfaction is much lower. Quantified, the satisfaction gap represents "an annual deadweight loss of $12 billion." That's approaching what the federal government dissipates yearly, he says, citing the $17.2 billion in misspending estimated by Citizens Against Government Waste. …