The economics of Christmas gifts

I love Christmas. I really do. I recently realized that I have not celebrated Christmas since moving back to Turkey from the United States in 2005, and I decided, on a whim, to spend Christmas in London, where I am writing this column on Christmas Day.

But there is one Christmas tradition that seems awfully wrong to me: The custom of gift-giving. I don’t have a problem with receiving gifts; on the contrary, I enjoy it as much as any bloke. But I have amassed many useless gifts over the years at New Year’s Eve, which we Turks have conveniently substituted for Christmas – along with the lighted pine trees, Santa Claus and turkey, the whole nine yards.

I am hardly the first economist to have noticed this inefficiency. Surveying his students at Yale University about the gifts they had received at Christmas, economist Joel Waldfogel found that most gifts were poorly chosen compared to what they would have picked themselves. He calculated the waste attributed to such gifts to be 20 percent, on average, of the price of the gifts. Presents from friends and significant others turned out to be the most efficient, whereas gifts from members of the extended family were the least efficient and destroyed a third of their value.

After publishing his findings in an influential paper at the prestigious American Economic Review in Dec. 1993, right around the holiday season and as I was taking my first ever economics class at Yale, Waldfogel went on to do more work on the same theme and wrote the book “Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays,” which was published in 2009, again just in time for the gift-giving season.

Of course, this idea does not apply only to Christmas. In fact, subsequent studies by Waldfogel and...