Christmas gift cards - micro and macro implications

With Christmas fast approaching, a gift card can be a tempting present when you have run out of ideas or simply think that the recipient will be happier choosing their own gift. But a good economics student should know that there are both micro and macroeconomic implications of this decision!

Let’s start with the macroeconomic implications.

The amount of Christmas spending is usually headline news and a barometer of economic confidence going into the new year. But what happens with a gift card purchase? If I buy a £20 gift card to give to my sister for a local bookstore, it is possible that she will wait until January before actually spending it. The retailer doesn’t book the sale until the card is spent (a wonderful opportunity to introduce your students to the fascinating topic of accrual accounting) so the figures don’t appear in last quarter GDP! This means that if gift cards become more popular, Christmas spending and last quarter GDP will be relatively lower than first quarter GDP. Hopefully the crisis of confidence caused will be relatively minor…

What about gift cards and overall efficiency?

Is overall efficiency and happiness likely to be higher with increased use of gift cards? Two things need to be weighed up here. Firstly, it would seem that if people can choose their own gifts then their personal satisfaction is likely to be higher (on average) than if someone else purchases the gift for them. If I have £50 pounds to spend in a sports store then the goods that I spend it on will almost certainly give me higher overall satisfaction than if someone else spends £50 on me from the same store. The second thing that needs to be considered is the happiness that is derived from the surprise of opening an unknown present and the appreciation of the thoughtfulness that goes into choosing an appropriate gift.

Perhaps there are different categories of recipients and your students might like to discuss who might go into each of the categories. I know that if I were to purchase my wife a £20 gift card from the local florist on Valentine’s day she would be distinctly unimpressed!

The last word goes to Jerry Seinfeld – the following clip sums up the arguments nicely!