The Native Americans had “potlatch.” Pacific Islanders had “Aropa.” Techies today have open-source software. And most people exchange gifts at Christmas-time. But is gift-giving rational?
A lot of economists say no. The look at the all the fruit cakes sent but never eaten or the ugly ties politely acknowledged and then tucked away and see nothing but a loss of hard-earned cash. One study estimates that as much as a third of the money spent on Christmas presents is wasted. They recommend people give money for Christmas, or give nothing.
But these modern incarnations of Ebenezer Scrooge miss the social importance of presents. Your kids may groan when they open the sweater from Aunt Polly, but you understand the time and energy she took to knit it. It strengthens your relationship. And the best gifts satisfy a need someone else has but doesn’t really know they have.
Such presents require a significant social investment—thinking like the person, getting into their head, imagining their world. We’re all prisoners of our own perspective and have a hard time seeing the world like someone else. But when we make that effort, our friendships and social bond are strengthened. And we know that strong and resilient social connections help everyone–physically, emotionally, and in many other ways. It’s not rational, but it’s real.
And as Linus told Charlie Brown at the pageant, isn’t that the real meaning of Christmas? “For unto you a Son is given.”
Douglas R. Tengdin, CFA
Chief Investment Officer
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