If you think that the jing-jing of Christmas bells is being slowly replaced by the ca-ching of the Christmas cash register, you are not hearing strange noises. December retail sales in our country have grown to reach nearly $400 billion. Shockingly, even in this recession-scarred holiday season, this figure exceeds the entire yearly income of Sub-Saharan Africa.¹

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As perverse as it often seems, gift-giving during this time of year has become an almost compulsory aspect of our culture. So as we consider our giving, let’s learn to give generously, but also wisely. In this light, here are five tips for holiday giving:

1. Adopt a skeptical attitude toward consumerism. Much recent research in economics and sociology has shown that beyond a certain point, having more things does not increase happiness. What leading social scientists such as Richard Easterlin, Robert Lane, and Louise Keely have found (in separate studies) is that having more material possessions when you are very poor increases happiness, but that after a point, having more material possessions does not. In fact, it seems to make people more socially isolated and less trusting of others.² This research bears out the truths of age-old wisdom: money is great for meeting our basic needs of food, clothing, and shelter, but not higher-order needs such as belonging, social intimacy, and self-worth.

This fact should lead us to tilt our giving toward the poor and away from the rich. For example, a wealthy couple might donate $10,000 per year to support the local symphony, and sponsor a child in Africa for $28 per month. One might consider reversing that.

2.  Give to communicate love to the receiver and not to assuage your own guilt. This is a hard one. So often we give to try to relieve negative feelings. For example, we buy someone a Christmas gift because if we don’t, we would feel ashamed. So we focus our giving energy on relieving the negative feeling instead of giving a gift that would truly communicate love to the recipient. For this reason good gifts are almost always personal in that they reflect an understanding and appreciation of the receiver, his or her interests, desires, dreams, and talents. In this way giving gifts is a small reflection of God’s love, which does just the same.

A new book by an author whom the recipient has enjoyed before, or even better, an author with whom the giver and receiver have a shared interest, may be much more valuable than a less personal gift costing many times more.

3. In our culture, today more than ever, it truly is “the thought that counts.” In our advanced, industrialized economy, money is relatively abundant. Time and energy, in contrast, are precious. The receiver knows this. Give out of your time and creative energy. Consider a person who habitually earns $200 an hour as a computer consultant or a financial analyst. Even a $100 gift is only a gift of 30 minutes of the giver’s time. In contrast, suppose that person has a hobby making things out of wood or writing songs on guitar. From this type of person, a gift that is a product of many hours in the wood shop, or a special song recorded for someone on a CD could be a real treasure. (Emphasize could be.)  If, like 90 percent of us, you are relatively rich, consider gifts that come out of your time and creative energy, not your bank account. They are likely to mean more.

4. Giving should never enable destructive behavior. Often we are asked for money on the street during the holidays. Sometimes it is by a charity that has a fine reputation for helping those in need. Sometimes it is by needy individuals. Recent studies have estimated that the percentage of money given to panhandlers that goes to the purchase of alcohol or illegal drugs ranges between 30 and 90 percent.³ Often we give to homeless people out of guilt, however, we can’t let our guilt trump wisdom. It is better to give (far more than we would give on the street) to charities that effectively help the homeless to overcome their challenges.

When we do give to someone on the street, ask the person if he or she is hungry. If so, consider inviting him or her to come with you to an inexpensive restaurant, buy them a meal, sit down with the person and talk for a while. Take 20 minutes out of your shopping spree to carry out this random act of kindness. This small amount of time spent with a stranger in need may mean as much to both of you as anything either of you will do around Christmas time.

5. Give gifts that complement the God-given gifts you see in others. Use your treasure to equip others and develop their talents. A nephew of yours is learning guitar. Give him a guitar-teaching video, a funky guitar strap, or a gift certificate to an online music store. Your niece has just been to Latin America on a short-term mission where she built houses for the poor. Sponsor her to attend a national Habitat for Humanity conference. Steer gifts away from entertainment and toward activities that bring joy to the person and help their natural gifts to flourish, especially as he or she is serving other people.

The Christmas season can be frustrating when it comes to giving. Through a barrage of ads, our consumer society is constantly shouting to us that buying expensive gifts at retail stores will make our loved ones happy and relieve our need to give the perfect gift. We need to ignore this deceptive voice. It is in finding creative ways to build up other people and glorify God that we truly find life.
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¹World Bank Country Statistics, econ.worldbank.org. <12.19.08>
²Richard Easterlin, “Income and Happiness: Towards a Unified Theory,” Economic Journal, no. 111(3) (July 2001);  Robert E. Lane, The Loss of Happiness in Market Economies (New Haven: Yale University Press, 1999);  Louise Keely, “Why Isn’t Growth Making Us Happier? Utility on the Hedonic Treadmill,” Journal of Economic Behavior and Organization, 57(3) (July 2005).
³Rohit Bose and Stephen Hwang, “Income and Spending Patterns Among Panhandlers,” Canadian Medical Association Journal, no. 167(5) (September 2000).

Bruce Wydick is Professor of Economics at the University of San Francisco in San Francisco, California. His recent book is Games in Economic Development (Cambridge: Cambridge University Press, 2008).