The research is clear: Americans are becoming less generous over the holidays. Not to sound too much like a Scrooge, but this is not necessarily a bad thing.
In 1999, Americans said they planned to spend US$1,300 (converting to 2020 dollars) on holiday gift giving. In 2020, that amount was about US$800. These numbers are based on Gallup data, but retail sales figures show a broadly similar pattern. From 1935 through 2000, gift-giving tended to rise with disposable income. Since 2000, gift-giving has fallen as national disposable income has risen.
In economics lingo, gifts have become an “inferior” good: Their quantity falls as income rises. Other examples of inferior goods include instant noodles or low-quality beans. Now — speaking strictly as an economist, of course — maybe Christmas sweaters and fruitcake should be added to the list.
These social changes are all the more puzzling with the continuing rise of online shopping. It is easier to buy and send people presents than it used to be, at least if you are so inclined.
One hypothesis is that Americans are simply getting less generous. Yet charitable giving is robust, so that is probably not right.
An alternative possibility is that Americans are too rich for gifts to make sense. It is not only that billionaires are hard to buy for — the rest of us are, too.
You might think your friends already have most of the important things they need, so how can you buy them something meaningful at the margin?
This logic does not hold for all Americans, but perhaps the higher earners account for a big enough share of the gift-giving total that it exerts a downward pull on the numbers.
The cheeriest scenario — again, speaking strictly as an economist — is that Americans are realizing that gift-giving often does not make much sense. If you give me a gift and I give you a gift, neither of us is quite sure what the other wants. We might both be better off if we each spent the money on ourselves. Under this hypothesis, Americans are not becoming less generous, they are becoming more rational.
Another rationale for gift-giving is that it tightens familial and social bonds. Perhaps it does, but it is not the only means for doing so. More and better communication — which has also become cheaper and easier over the past two decades, with e-mail, texts and cheaper phone calls — might make gift-giving seem less essential.
There is also the possibility that we, as a society, have lost that “Christmas spirit,” whatever that might mean. After all, secularization is rising and churchgoing is declining. Christianity is less central to US life. Whether this social development is all good or bad would of course depend on your point of view.
In any case, you probably need not fear that less gift-giving will hurt the economy. Americans might be spending less in December, but that gives them more money to spend the rest of the year. As it stands, advanced economies typically exhibit a seasonal business cycle: There is a boom as the gift-giving season approaches, and a downturn in the new year as consumers contract their spending. As expenditures become smoother across the seasons, so does economic activity.
There is no obvious downside to this development. Maybe it will become somewhat harder to get a retail job in December, and somewhat easier in January. In some cases, Americans might save more rather than spread their spending out. That does not hurt the economy, and it might even help many people deal with their retirements.
At any rate, to get back to the subject I started with: I am not sure if the decline in holiday spending is good for society, but I do not mind it. I do not need or want much in the way of gifts; I would much rather spend time with friends at a nice holiday meal. (Which is also a gift, I realize, although what marketers call “experiential.”)
In the meantime, I am trying to think of a some good deeds and thoughtful gifts I can make in the third week of June next year. Marking the winter solstice might be a vestige of an outdated, agriculturally oriented society, but that does not mean we should not look for new sources of meaning and charity — wherever on the calendar, or on the globe, we might find them.
Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. He is coauthor of Talent: How to Identify Energizers, Creatives, and Winners Around the World. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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