Australia might have just wasted $760 million buying Christmas presents

"Why didn't they just give me money?"

Ungrateful children everywhere have thought this, unwrapping their presents on Christmas Day.

And it turns out they've got a pretty decent economic argument behind them.

In 1993, Joel Waldfogel, then an economist at Yale University, turned his mind to how much value is lost when people give each other gifts. 

So he asked his students to estimate the total value of gifts they received during the holiday season.

Then he asked how much they would be willing to pay for those gifts themselves, with the difference between the two figures revealing a "deadweight loss" – an unnecessary waste of resources.  


"I find that holiday gift-giving destroys between 10 per cent and a third of the value of gifts," Waldfogel wrote in his now famous paper.

That suggests that between $10 and $33 was wasted for every $100 you spent on gifts in 2015. this year.

Across Australia, that translates to some serious cash.

The best estimate we have for how much Australians spend on gifts at Christmas comes from the Commonwealth Bank, which last season put the bill at $7.6 billion.

Using Waldfogel's theory, that means between $760 million and $2.5 billion of value vanished into thin air. 

Although none of this takes into account the sentimental value in gifts, nor the fact that sometimes the best gifts are ones you would never buy for yourself.

But then again, they don't call economics the dismal science for nothing.