My last segment for the year on ABC Radio National’s Life Matters program was talking about Joel Waldfogel’s work on the deadweight cost of Christmas (aka Scroogenomics). The podcast should be here in a few hours.
For the data wonks, I use Waldfogel’s approach of calculating the cost of Christmas as the difference between December retail sales and the average of the abutting November and January. Over recent years, this produces a figure of about $5 billion (2008 was nearly $6 billion, but my guess is that this was stimulus-related). With 21 million Australians, that’s about $250 in Christmas gifts per person. Using surveys, Waldfogel estimates that recipients value gifts at about 82% of the value that they place on their own purchases. In other words, the deadweight cost of Christmas is 18%. For Australia, that suggests our deadweight cost of Christmas is $1 billion for the entire economy, or an average of $50 per person.
What should we do instead? For people you don’t know very well, gift cards beat cash (just make sure the recipient doesn’t lose the card). And for the person who has everything, how about a goat?