Before you storm the mall (or Internet) this holiday season, Wharton University professor Joel Waldfogel would like you to know something: knocking yourself out trying to find The Perfect Gift is often a waste of time.

Worse, from an economic perspective, you’re practically committing a sin. That’s because it is not only highly unlikely the recipient will actually like what you’ve picked out, you’re destroying value- about $13 billion worth.  That’s the difference between the $65 billion Americans will spend on holiday gifts this year compared to what those who receive those gifts would be willing to pay for them if they bought them for themselves.

“When I’m shopping for myself,” says Waldfogel, “I will only spend $50 on something if it is worth $50 to me.  But with gift giving, if I want to spend $50 on you, I could end up buying something that is not worth $50 to you.”  In fact, according to surveys, on average the recipient of that $50 gift would only pay $40 for it- if he would even consider purchasing it for himself at all. According to Waldfogel, that 20% difference is “the missing satisfaction” caused by the fact that “items were chosen by someone other than the ultimate consumer.”

Waldfogel, whose book Scroogenomics has just been released, is quick to point out that he is not at all opposed to gift-giving. In fact, he describes himself as “an avid giver- and a generous one- especially with close family.”  

It’s those obligatory gifts we feel we have to buy for far-flung relatives and others we barely know that cause the disconnect between price (paid by the giver) and value (assigned by the recipient).  In economic-speak, it’s a problem with the way we allocate resources.

Since you know those you’re closest to the best, you’re more likely to hit the mark in terms of the presents you buy for them.  For instance, you might have caught your spouse eyeing cashmere sweaters in a store or catalog.  Knowing that blue is her favorite color, you spend $150 on a royal blue cashmere cardigan for her.  If asked, she probably would say that it is 1) something she would purchase for herself and, 2) she would be willing to spend around $150 for it.  Thus, there is no “value destruction.”

On the other hand, buying the same cashmere sweater for your niece whom you haven’t seen in 3 years is, in Waldfogel’s terms, “a recipe for disaster,” even if it’s done with the best of intentions.  Aside from the obvious issues- What size?  What color?- there are a host of others. What if your cute 12-year old niece has turned into a 15-year old Goth who wouldn’t be caught dead in anything but black and oh-by-the-way also happens to be allergic to cashmere?!

Even the ever-popular food gifts can cause a major faux pas.  If no one in the family tells you that Uncle Ernie finally joined AA is it your fault you brought him a bottle of wine?  How were you supposed to know that the mail carrier is a vegan when you gave her that ham?

If you can’t simply delete everyone except immediate family and your closest friends from your gift list, what’s the solution? 

“Just give cash,” says Waldfogel.  The drawback is that in addition to feeling impersonal, cash is “socially awkward” in many situations.  Your cousin, for instance.  However, there are exceptions.  In Waldfogel’s view, it’s perfectly acceptable for aunts, uncles, and grandparents to give cash to nieces, nephews, and grandkids.

The next best thing? Gift cards. “These allow the recipient to choose what item they want.”  In economic terms, they’re very “efficient” because theoretically recipients will not pay more than an item is worth to them.   Waldfogel himself gives them to people who are outside his immediate family.  Though cash-like, he points out that somehow gift cards “have avoided the stigma of cash.”  Which probably accounts for their soaring popularity.

An alternative is something Waldfogel calls “transcendent giving.”  As he describes it, “How can I [the gift giver] transcend what you could do with cash?”  One suggestion?  Give someone permission to buy something they ordinarily wouldn’t buy for themselves because they would feel guilty about spending the money.  This works especially well with a close family member such as your spouse.  If he hasn’t bought the new digital camera he’d really love to have  because it feels too self-indulgent, give him the OK to do so- no strings attached. 

Another “transcendent gift” is to make a donation to a charity in the recipient’s name.  It helps if you know a cause that the individual is passionate about- global warming, ending famine, animal welfare, education, the ballet company in their city, etc.

If you aren’t sure, you can give a charity gift card that allows the recipient to direct the proceeds to one or several organizations.  TisBest Philanthropy, for instance, lists 250 national nonprofits as well as locally-based groups that meet their criteria.  Gifts cards can be purchased at http://www.TisBest.org. The Network for Good offers gift cards at http://www1.networkforgood.org/for-donors. You can find others by typing “charity gift card” in your web browser search box. Suggestion: check out the organization sponsoring the gift cards by going to http://www2.guidestar.org/.  

So before you click, swipe, or write a check for yet another half-appreciated present this year, maybe it’s time to pause. Reduce your gift-giving list as much as you can and, like Santa, check it twice.  Spend your money, time and energy finding the special items you know that those you are closest to really want.  Buy everyone else a $9.95 copy of Scroogenomics and (maybe) stick a gift card in it.  Who knows?  You might get everyone in your circle re-thinking their holiday spending.

In Waldfogel’s words, “Have a happy and efficient holiday!”

*Hanukah, Kwanza, Ramadan