Who says you can't buy happiness? Photographer: Krisztian Bocsi/Bloomberg
Who says you can't buy happiness? Photographer: Krisztian Bocsi/Bloomberg

The Christmas season is a fraught one for economists. Gift-giving is so inefficient! Just as some complain that food stamps are bad because they force the poor to consume their benefits in the form of food rather than something they might want more, folks like Joel Waldfogel bemoan our tendency to give each other tchotchkes instead of sensibly spending money on something we actually want.

But don’t worry, giving gifts is still a good idea: good for you, and good for society.

Let’s start with you. Mike Norton and Elizabeth Dunn make a convincing case that buying gifts for someone else actually makes you happier than spending it on yourself. They gave people money, and told them either to get something for someone else, or spend it on themselves. The people who spent it on someone else reported being much happier with the experience than the folks who bought themselves something. It seems it really is better to give than to receive.

OK, but then why not just give each other cash? That’s fine if you’re mailing a 20 to the grandkids, in exchange for the misshapen ashtray they made in kindergarten. But in most cases cash exchange obviously makes no sense: I give you $80, then you give me $80, and … oh, well, that made no sense. Or I give you $80 and you give me $20, and isn’t this uncomfortable? With cash, an exchange is necessarily one way, or else it’s meaningless. That’s obviously not the case with gifts, when a $20 vintage scarf can be as treasured as a $500 watch.

David Graeber argues, in his uneven but thoroughly thought-provoking book on money, that barter and eventually money are for strangers. Gifts -- reciprocal altruism -- are for our near and dear.

That’s why gifts are good for your relationships, and society, as well as for you: they strengthen the ties between you and the people around you. So ignore the “Bah, humbugs!” and the efficiency arguments, and gift away. And have yourself a Merry little Christmas.