Calculating Christmas: Monetary Cost, Opportunity Cost, and Perceived Value in Gift Giving

in Lifestyle/Noteworthy by

Holiday season festivities are nigh. As usual, stress levels are high, cash flow is low, and shopping carts are full as everyone rushes to find that last perfect gift for their list of friends and loved ones.

It may (or may not) surprise you to discover that the average American spends $900 per year on Christmas gifts. In 2016, the estimated total holiday expenditure was around a whopping one trillion dollars.

So is it any wonder that some people have started to make a significant change during the holiday season, sometimes going the DIY route and often opting out of gift giving altogether? The desire to declutter and incorporate minimalization into our lives is to be expected, after years of being overwhelmed during the holiday season. However, many continue to follow the trend out of a sense of habit and obligation.

Where do cost and value come together during the holiday season? Can you take a minimalist approach to gifts, without sacrificing the spirit of holiday giving? Here are some things to consider:

Experiences Over Things

Depending on the practicality, things often end up doing nothing more than taking up space. There are exceptions to this idea, of course. For example, art generally has no functional purpose in the home but is still valuable, aesthetically pleasing, and worth the space it inhabits.

We can observe this unconscious desire to shift away from physical objects by observing technology trends over the past few decades. The “bigger is better” mentality has become “less is more” in terms of size and convenience.

As technology has developed, we’ve traded bulky VHS for sleeker DVDs to cloud storage and streaming. We’ve seen the same trend in music. Computers which once took up entire rooms are now small, handheld devices.

As our “less is more” mentality develops, so does the desire to have experiences rather than objects. Consider foregoing gift exchanges with friends and planning a group dinner instead. Rather than buying children toys, consider taking them (or sending their entire family) to a local attraction. Rather than spending large sums of money on toys and gifts, put the funds toward a trip. The idea is to make memories rather than clutter.

Meaningful or Purposeful

When purchasing something for someone, you need to be able to put yourselves in their shoes. If you think something would be really interesting or helpful, make sure it would be so to the recipient rather than yourself.

Purchasing canvasses for someone who loves to paint is both purposeful and meaningful. Purchasing wireless headphones for a marathoner, while materialistic, is also purposeful as you know it will be used while they engage in something they love. Buying an object that you think might be useful since you can’t come up with anything else, is not.

Don’t be afraid to conduct some research. Look at different gift ideas online based on someone’s interests. If you don’t know someone’s interests well enough to do some reconnaissance work, evaluate the reasons why you are buying this person a gift.

The Great Gift Card Debate

As gift cards have gained popularity, they’ve also become the source of many debates on gift-giving etiquette. While many argue that gift cards are a quick, convenient way to show your appreciation, others argue that they’re impersonal, thoughtless, and even tacky.

As with any gift, it’s the intent behind the present that matters. Consider the phrase, “It’s the thought that counts.” It’s usually apparent when someone buys a gift card on the way to a party because they left everything to the last minute. Gift cards still have merit in terms of thoughtfulness. Buying movie theater gift cards for film buffs, or home renovation gift cards for new homeowners are both examples that show when someone puts thought into their purchase.

To delve further into the issue, look at the sharing of holiday cards without gifts. While the cards have no functional purpose, they are a way people show that someone is in their thoughts at a time when family is meant to be at the forefront of our minds. This further speaks to the idea of intent over monetary value or uniqueness.

The Do-It-Yourself Approach

What better way to cut back on Christmas expenses while still showing you care than by creating gifts by hand? Social media platforms like Pinterest have made idea generation and inspired creation accessible and straightforward. Ideas we would never have considered, let alone tasked ourselves with creating, come with step-by-step instructions.

The caveat of taking on a do-it-yourself approach when it comes to holiday gift giving is that it won’t necessarily be cheaper than purchasing gifts. Supplies can quickly add up and the time required might be more substantial than you would otherwise be willing to dedicate to shopping. With online shopping, you may be able to get most of your purchases without leaving the comfort of your home.

You must also consider the opportunity cost of creating your own gifts. Opportunity cost is what options you must give up to choose another option. How valuable is your time? Beyond money, what is this project costing you? If your holiday season is busy and stressful, and the experience of trying to put gifts together will be an unpleasant, time-consuming challenge, is it worth the monetary savings?

Consider then, the intangible value that goes with a handmade gift. We keep scribbles from our childhood, despite the fact that they have no artistic value. Many of us are able to separate sentimentalism from materialism, while others are strongly attached to physical representations of memory and emotion. Does sentimental value trump opportunity cost as well as monetary cost?

Key Takeaways for Gift Giving

No matter what route you choose to go this holiday season, whether you donate to a preferred charity in someone’s name, make handmade soaps, or make it your mission to shop for the perfect gift, remember to be mindful. Consider the person you are buying for and their place in your life. Don’t go outside your monetary means out of a sense of obligation.

Purchase or make gifts with care and positive intentions, and you’ll experience less mental and financial stress. By taking a closer look at how and why you give gifts, you’ll survive the holiday season with your blood pressure, relationships, and bank account intact.

Nikita Ross is a freelance writer and self-proclaimed bibliophile with a background in social media management, marketing and event coordination. An avid traveler, Nikita’s adventures have taken her on a road trip through Iceland and backpacking through Peru. When she’s not planning her next great escape, Nikita can be found writing or reading with coffee in hand.