The day after Christmas is, by most accounts, the third- or fourth-busiest shopping day of the year. All those people who run around like mad in the weeks before Christmas buying gifts for family and friends are back at the mall on the day after to exchange the gifts they received from their aforementioned family and friends. This phenomen has not gone unnoticed by practitioners of the so-called dismal science. Yale economist Joel Waldfogel first called attention to it in an academic paper entitled “The Deadweight Loss of Christmas.” “Deadweight loss” is economics jargon for various types of market inefficency – in this case, the loss of economic value that results when the person who receives a gift values it less than the amount the giver paid for it. Surveys Waldfogel conducted among Yale undergraduates indicated that the deadweight loss of holiday gift-giving amounted to 10 percent to a third of the value of the gift on average, which translates into tens of billions of dollars for the economy as a whole.
We have long since grown accustomed to thinking of the Christmas season as a leading economic indicator. Religious traditionalists may bemoan the fact. It should be pointed out, however, that gift-giving among tribal societies may have been the basis for the development of money economies in the first place. And the connection between gift-giving and Christmas is itself a bit tenuous, based on a single verse in the Gospel of Matthew in which “wise men from the east” came to Bethlehem bearing gifts for the Christ child. They did not exchange gifts with one another, much less with Jesus’ family members or attendant shepherds, and they arrived some time after Christ’s birth, on a day that is now commemorated in January. The basis for gift-giving at Christmas may, in fact, derive from the Roman Saturnalia, which was originally celebrated on December 25, the date of the winter solstice under the old Roman calendar. Puritans frowned on the practice, and for a while during the 17th century any unseemly merry-making at Christmas was banned both in England and America.
Most of the unseemly merry-making we now associate with Christmas originated during the Victorian era. To a considerable extent, what we now think of as holiday traditions were literary inventions based on Charles Dickens’ “A Christmas Carol” and Clement Moore’s “The Night Before Christmas.” St. Nicholas, a fourth-century Greek bishop noted for his generosity, morphed into the jolly old elf of Moore’s poem, traversing the rooftops of the world in an airborne sleigh pulled by reindeer. Queen Victoria’s German-born comsort, Prince Albert, popularized the Christmas tree. Gift-giving began on a fairly modest scale, but already by 1867 Macy’s was staying open until midnight on Christmas Eve to accomodate last-minute shoppers.
As an economic transaction, the giving and receiving of gifts is fairly straightforward, notwithstanding any resulting deadweight loss. However, the underlying human exchange can be quite complex, as Ralph Waldo Emerson noted in his brief essay “Gifts,” published in 1844. According to Emerson, the gift must in some way be fitting to the occasion, an expression of the giver and at the same time appropriate to the receiver, without creating a sense of obligation that might breed resentment. “Rings and jewels are not gifts, but apologies for gifts,” Emerson admonished, adding, “it is a cold, lifeless business when you go to the shops to buy me something, which does not represent your life and talent, but a goldsmith's.”
By this standard, of course, the gifts the wise men bestowed on the Christ child would be found wanting. Their gifts were purely ceremonial. Better are the gifts bestowed by the real St. Nicholas, who lavished his inheritance on the poor. Nicholas’ contemporary, St. Anthony, did much the same. Anthony had been inspired by a gospel story in which Jesus advised a rich young man, "Go, sell what you have and give to the poor, and you will find treasure in heaven." The rich young man was not inspired to do as St. Anthony did. The story ended when he went away feeling sorrowful “for he had great possessions." He apparently labored under the illusion that he stood to lose in this transaction, as if he were a pocket that could be emptied. If he truly understood what it is to give of oneself, he would know that it is impossible to give everything away, because heavenly treasure is inexhaustible.
Joel Waldfogel, "The Deadweight Loss of Christmas," American Economic Review (December 1993)