Estimated read time: 2-3 minutes
SALT LAKE CITY -- Is American consumerism actually doing more harm than good to the economy this Christmas shopping season? That's the premise behind a book by Joel Waldfogel called "Scroogenomics." He suggests you're better off not to give someone a gift at all, rather than give them something they don't want.
The idea is that when you give an unwanted gift, even if you paid $50 for it, it may be worth much less to the recipient. Waldfogel estimates in this way, Americans create billions of dollars in "dead weight loss" every year.
"What I think has utility, you may think, ‘Wow. What a waste,'" explainED Deseret Mutual financial planner Shane Stewart.
Utility is the value that you get out of what you've bought. For most of us, that means we want the benefit of the product we've bought more than we want to keep the money we paid for it.
Stewart sees a fallacy in Waldfogel's argument, in that even an unwanted gift has potential value, if not to the recipient, then to the giver, the people who made the product, the people who sold it, and so on.
"Somebody bought the materials, somebody produced it. See, all the different companies that possibly touched that product before it came to me to buy helps the economy," Stewart said.
He believes Waldfogel's premise makes more sense as social advice than economic advice.
"Economically, it's not really as sound," he says. "Sociologically? Sure. We should be thinking about those things and giving good gifts."
Besides which, he says, even the things that you've bought yourself don't always wind up living up to their potential value.
"I bet if each of us went home and looked in our closets, we'd have ‘dead weight loss' that we purchased," he said, "yet that doesn't hurt the economy."
What's more likely to hurt, in his opinion, is spending beyond your means. He says it's a good idea to plan ahead and even set cash aside for Christmas well in advance, so that you can enjoy the benefits of giving to others without creating a hardship for yourself when the bills arrive in January.