"I want a baby doll and a waterproof [coat] with a hood and a pair of gloves and a toffee apple and a gold penny and a silver sixpence and a long toffee." Annie Howard, Christmas 1911.
In 1993, Joe Waldfogel asked his undergraduates to estimate the total amount paid by the gift-givers for all of the holiday presents they had received that year. He then asked:
Apart from any sentimental value of the items, if you did not have them, how much would you be willing to pay to obtain them?
The answers to the second question were ten to 30 percent lower than the answers to the first, leading Waldfogel to conclude that Christmas destroys value, and creates a deadweight loss.
There is undoubtedly some deadweight loss associated with Christmas - useless stuff that the recipient really could do without. Yet an economist should always be suspicious of claims that real-world institutions are inefficient - they have evolved they way they have for a reason.
Here are some reasons why, even if Waldfogel's students are representative, and their answers are a true reflection of their valuations of the gifts, Christmas might not create deadweight loss:
First, people tend to heavily discount the future, to be short-sighted. Christmas gifts are often consumer durables, like the waterproof coat Annie asked for, or the garlic press our special guest found in her stocking this Christmas. A short-sighted person will tend to undervalue such gifts in the short term, but enjoy the consumption benefits they provide in the long term.
Second, some Christmas gifts are merit goods, that is, things that benefit the recipient in the long-term, even though the recipient may not appreciate their value. A balance board or wellness mat is the kind of gift that fits into that category.
Third, the possibility of splurging at Christmas is a way of keeping consumption low at other times. Annie wants a toffee apple and a long toffee at Christmas because she doesn't get them on a regular basis. Reserving special foods and special treats for special times is a way of regulating consumption, a way of saying "not now" to temptation.
Other people may have made these points before, but I don't have time to research this topic - Boxing Day guests are arriving soon.