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For most of those people around the world who celebrate Christmas, the holiday is synonymous with gifts, both giving and receiving. As the vast majority of gifts are purchased, the impact of Christmas spending on a nation’s economy is profound. Approximately 70% of the Gross Domestic Product (GDP) of the United States comes from consumer spending, and holiday spending accounts for between 20 to 25% of all personal spending. To handle the influx of shoppers, retailers in the United States hire hundreds of thousands of seasonal workers.

Since the GDP of the United States is over $21 trillion, holiday spending works out to over $3 trillion. To put that in perspective, consumers in the United States spend more on holiday shopping than the GDP of any other country save China, Japan, and Germany.

The average American expects to receive about 15 gifts this year. If the average gift is $55, then Americans are receiving well over $800 worth of presents. A 2016 survey revealed that 3 in 10 people expected to spend over $500 on gifts during the holiday season, and Americans expect to spend an average of $846 on gifts in 2019.

While over 70% of people think that Christmas is too commercial, it does not seem to prevent them from participating. One in five Americans will increase their debt to finance holiday spending. And about one-half of those surveyed felt pressured to splurge during the holidays.

Gifts are not the only holiday expenditures. There are entire industries devoted to some aspect of the season. For example, the retail value of Christmas trees is over two and a half billion dollars. And approximately two billion Christmas cards are sent each year, with the average person spending over $29 on them.

But gifts, whether for one’s self or for others, make up the bulk of holiday spending, and will be the focus here. The sheer volumes of gift giving makes it a certainty that some of us will receive items that we neither need nor want. The experience is common. Although you are quite sure that you never even hinted at wanting one, someone in your family decided that the perfect gift for you was an 18-inch figurine of Christopher Walken that cleverly doubles as an electric can opener. Despite their belief that such a stylish and practical gift deserves a permanent place on your kitchen counter, you have no intention of ever putting it there. What to do?

Gift recipients around the world are often faced with a similar dilemma. Most of us balk at throwing away gifts, but the other options do not seem much better. Depending on the gift, you could try to sell it, return it to the store, donate it to charity, or regift it to someone else. The Wall Street Journal recently published an interesting article on “regifting.”

Why Regifting Makes Economic Sense

In 2009 economist Joel Waldfogel wrote a book entitled “Scroogenomics,” in which he opined that gift giving was a misallocation of resources. For example, if you give someone a gift that cost $100, they may only get $75 worth of value from the gift. The remaining $25 is “lost,” in an economic sense. Waldfogel dubbed this the “deadweight loss of Christmas.”

In much the same way that economists prefer government programs to aid the poor provide additional income, rather than things the government has determined that poor people need, gifts of cash presumably ensure that the value received is equal to the value given.

Of course, there are plenty of practical and emotional reasons to give actual gifts rather than cash. It is hard to put a value on the warm, fuzzy feeling that comes from giving a special person in your life the perfect gift. Although cash might be appreciated, it is difficult to imagine it provoking the same emotional response for the giftor or the giftee.

The reality however, is that not every gift is perfect, and sooner or later we are likely to be given something that we do not want. A 2016 survey found that one person in seven had been given at least one gift the previous year that fit into this category. What people did with said gift varied.

In Europe, half the people kept the gift anyway. A quarter regifted the item to someone else. The rest were sold, returned, given to charity, or simply disposed of. Some people even gave the gift back to the giver. Baby boomers were more likely than millennials to give the unwanted present to charity.

Americans were more likely than Europeans to regift their unwanted presents, but also more likely to throw them away or return them to a store. Australians were more likely to donate their unwanted Christmas gifts to charity.

Why don’t more people simply pass the unwanted gift along to someone who might appreciate the item? Researchers studying the issue found a strong perception that the practice was socially unacceptable. Subjects used words like guilty, thoughtless, lazy, and disrespectful to describe their feelings about regifting. The TV show Seinfeld had an episode highlighting the stigma attached to regifting (titled “The Label Maker” it also featured Super Bowl tickets and Kramer and Newman playing Risk).

However, research suggests that the negative consequences are overestimated. When asked to imagine themselves as the original gift “giver” or as the “regifter,” the regifters felt worse about the practice, assuming the giver’s feelings would be hurt. The givers though, generally had the attitude of “It’s yours now to do with as you want.”

When the two groups were asked which was worse, regifting or throwing the gift away, the regifters thought the choices would be equally offensive to the givers. By a large margin, the givers greatly preferred the gift to be given to someone else.

To see if regifting could be made more palatable, researchers divided people who had recently been given presents into two group. The first group was offered the chance to regift, but only one in ten accepted. The second group was told that it was “National Regifting Day” (which is a real thing; it’s the Thursday before Christmas) and three in ten agreed to regift.

If you are someone who would be offended by your thoughtful present being regifted, avoid items that appeal to personal taste, like perfume, ornaments, or most clothing. While your sense of style is likely impeccable, the same may not be true of your friends and family. In much the same way that no one admits to being a below average driver, yet we know such people exist, few of us would say we give poor gifts.

And if you do receive something that isn’t right for you, go ahead and give it to someone else. The giver probably won’t care, and you will make an economist happy.

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