There are economists who argue that holiday gift giving may make us less happy — not more.
I doubt they are entirely correct, but following their argument provides some interesting insight both into how economists think and into the role that material goods play in our overall happiness.
Start by remembering the assumption underlying nearly all economic theory: Human beings make choices in their lives to maximize their level of satisfaction or happiness. Satisfaction comes from a variety of sources, including having our physical needs for nutrition, shelter and clothing met with physical things like Pop-Tarts, houses and blue jeans.
We also get physiological satisfaction from being respected, admired, desired or envied. Madison Avenue and popular culture tell us that buying the right shirt, drinking the right beer or driving the right car can help with this. In any case, economists argue, people prefer a more-satisfied life to a less-satisfied one and we make choices accordingly.
Holiday gift giving, Grinchy economists argue, makes many people worse off.
That’s because the giver’s lost satisfaction incorporated in money spent on a gift, together with the time and effort of buying, wrapping and delivering it, is greater than the increase in satisfaction experienced by the person getting the gift. Repeated across millions of giver-receiver pairs, gift giving leaves society less satisfied than if it had not taken place.
Not so fast, other, less-Grinchy economists respond. Yes, the giver expends money that might be used to satisfy needs and wants in other ways. Yes, struggling through crowded stores and parking lots is a pain. But the process is not all negative for the giver. Most people get some satisfaction from the very act of giving a gift to someone else. This is particularly true when the relationship is an emotionally important one, parent-child, grandparent-grandchild, husband-wife or significant other-significant other.
In addition, getting a gift from someone else produces satisfaction in the recipient that goes beyond the utility produced by the object given. In other words, it really is the thought that counts. The singing fish doesn’t really make you much happier, but the fact that Aunt Betsy thought enough of you to buy it reminds you how important she is in your life.
A third group of economists wishes a plague upon the houses of the first two. It is impossible, they say, to measure human satisfaction on an objective scale the way we measure temperature. Thus, directly comparing degrees of satisfaction between different individuals is simply impossible. There is no good way to be sure if any set of actions makes people better off, worse off, more satisfied or less satisfied.
Yes, a few economists might devise elaborate questionnaires designed to elicit from gift givers and receivers some estimate of the equivalent money value of all the plusses and minuses associated with the process and then tabulate the results. However, this is a clumsy rough estimate at best. The whole process is cultural, something we want to do — or are expected to do — for non-economic reasons and, like all other matters of individual preference, is not really debatable.
These neutrals on the increase or decrease in societal satisfaction might add a few insights. For nearly any good or service, the addition to satisfaction from consuming one more unit of the good decreases as we consume more. The second helping of food may be satisfying, but not as satisfying as the first. Going to Cancun for the third time may be fun, but not as much fun as the second, which in turn was less than the first.
Thus, as many of us become more affluent, the additional satisfaction we get from additional anything — gift or non-gift — tends to be lower than if we were still poor
As a child in the Depression, my mother may have been happy to get a new dress, an orange and a small bag of candy for Christmas. I have more clothes than I could ever wear out, can choose between oranges, mangos, kiwis, uglis and other exotic fruits in my neighborhood store and regularly eat fresh green beans in January. It is hard to find something genuinely special for someone like me who has so much.
Economists may suggest it is harder now to add to people’s satisfaction by giving presents than it was two or five decades ago when most families had less. Psychologists may suggest that this is why the pace of Christmas shopping has gotten so much more frenetic: We are trying to attain a harder and harder goal.
Here is where theologians and philosophers can speak wisdom. In the holidays as in architecture, less may be more. Satisfaction or happiness may come from enjoying goods and services. It can also come from important relationships, to each other, to our community, to the God in whom we believe.
If more goods and services add little to our happiness and if time, not money, is the scarcest resource in our lives, then spending less time shopping and more time simply being with others may be the most effective way to achieve greater happiness.
This is one case where economic theory and the wisdom of the ages point to the same conclusion.
© 2003 Edward Lotterman
Chanarambie Consulting, Inc.