Canadians are planning to scale back their holiday spending this year, with about two-thirds saying they plan to spend less or the same as last year, according to a recent Ipsos poll.

It’s no wonder. Inflation has been running riot all year and, with the Bank of Canada hiking interest rates to get it under control, most Canadians are anticipating a recession in 2023.

While there are obvious and pressing reasons for people to scale back spending in the short term, we may also be changing how we celebrate the holiday season.

It could be that, when it comes to gift-giving, everyday Canadians are catching up with the convincing pile of research that suggests experiences are better for us than material possessions.

A team of researchers set out to explain why experiences seem to give us more enduring happiness than things and found that the anticipation is a key factor. While we anticipate Christmas, or other gift-giving holidays, we don’t normally get to anticipate the specific gifts because they come as a surprise. An experiential gift, like a trip, a concert, or even a dinner out with family, has a period of anticipation before the experience itself. We also seem to enjoy anticipating experiential gifts more than material ones.

This could represent a shift in how Canadians think about the holidays that would result in less money spent on gifts, more time spent together and, if the research is correct, happier people overall.

The Ipsos poll also suggests that nearly half of Canadians would be content with a loved one making a charitable gift in their name rather than a physical gift (provided the charity actually exists, of course).

There are two big caveats with that poll: it was conducted on behalf of a fundraising and donation platform, and people may overestimate their own generosity and civic-mindedness when speaking to pollsters. For example, when pollsters ask Canadians if they are going to vote in an upcoming election, the number is always much higher than the actual turnout. It’s also possible that the poll shows people are just getting less enamoured with “stuff.”

Economist Tyler Cowen writes that physical gifts have become an “inferior good,” whose value falls even as incomes rise and services, like Amazon, make it easier to purchase them.

Cowen entertains the idea that holiday spending is falling because people are becoming less generous as well as the theory that our high average incomes make it harder for people to buy gifts for us, but he settles on the conclusion that we’re simply realizing gift-giving doesn’t make sense.

“If you give me a gift and I give you a gift, neither of us is quite sure what the other wants. We might both be better off if we each spent the money on ourselves. Under this hypothesis, Americans are not becoming less generous, they are becoming more rational,” wrote Cowen.

And, if we’re still set on gift-giving, Cowen says there is no downside to spreading our generosity throughout the year, rather than blowing all our cash on Christmas.

The inefficiency of gift-giving has long been a topic of consternation for economists.

The economist Joel Waldfogel famously wrote about the “deadweight loss” inherent to gift-giving. As Cowen also argues, we don’t know each other well enough to be precise with our gifts. Waldfogel estimated that money we spend on others is worth about 85 percent of the money we spend on ourselves. Everything else, he writes, is just waste.

Using Waldfogel’s estimates, Ian Stewart, the chief economist at Deloitte, calculated that waste at about 3 billion GBP last year.

This Christmas, giving the gift of cryptocurrency may not make your family as happy compared to years past. Prior to the crash of the cryptocurrency exchange FTX in November, Canada was one of the most crypto-obsessed countries on Earth. 

A study conducted at the time by CryptoManiaks found that Canadians searched about crypto-related topics more than nearly every other population on Earth, behind only the Germans, Turks, and the Dutch.

According to the study, there were 1,671,800 searches per month, a number equivalent to 4.3 percent of the Canadian population. 

The FTX crash resulted in massive losses for investors as cryptocurrency values plummeted, resulting in roughly $8 billion in losses for depositors. Commentators have speculated that the crash might be the end of the cryptocurrency industry. 

Will the crash of FTX and the arrest of founder Sam Bankman-Fried be the end of that Canadian obsession? 

Matt Spoke is the founder of the fintech company Move and Hub contributor who has worked in the cryptocurrency industry. He says any loss of enthusiasm from the FTX crash will be temporary, even if he cannot predict how long it will take to recover. 

“Obviously in the short term, it’s caused a lot of volatility, a lot of loss of trust. But when one looks at entering the system, there are probably 1000 other bad actors out there that are eventually going to get flushed out every time one of these big headline-grabbing hacks or frauds or thefts or whatever occurs,” says Matt Spoke. 

Bankman-Fried faces a plethora of charges in the United States related to FTX, including conspiracy to commit wire fraud, wire fraud, and conspiracy to defraud the Federal Election Commission. 

Spoke says that fewer bad actors is a positive development in any industry and that Bankman-Fried’s creation was ironic considering what crypto was intended to become. 

“Bitcoin and crypto more broadly promised this decentralized financial world, and FTX was sort of the antithesis to that,” says Spoke. “FTX was this massive honeypot centralized organization where you are effectively depositing money denominated in Bitcoin or Ether or other crypto assets into a bank that has all of the risks associated with being a bank, but without any of the regulatory oversight.” 

Nigel Barber, an evolutionary psychologist who has written about cryptocurrencies, says there is no good way to determine the actual value of cryptocurrency, which is risky for investors. 

Barber compares cryptocurrencies to the Dutch tulip craze in the 17th century when people spent vast fortunes on quantities of the flowers, despite it lacking any precise value, eventually resulting in the tulip bubble popping and a tremendous wealth wipeout. 

“The biggest problem with investing in crypto, or tulips, is that there is not a reliable way of determining valuation,” says Barber. “This means that enthusiasts see the value going skywards whereas skeptics set the value at zero. One consequence of price uncertainty is wild price swings that create speculation.” 

Barber says the FTX crash is a real issue for cryptocurrencies because it revealed the shortcomings that result from the same issues of any unregulated currency, such as fraud and deception. He says this can be observed in the FTX scandal, as well as the theft of crypto by criminal entities. 

“Crypto is not a reliable store of value and is not secure. These basic confidence issues are not going away,” says Barber. “They cannot be solved by government regulation since effectively there is none.” 

Spoke says FTX represented the worst of both worlds, combining the volatility of crypto and the risk of traditional banks but no regulatory oversight. 

Nonetheless, Spoke believes cryptocurrencies are not going to disappear.

“I don’t think that FTX really shakes my confidence that there’s value being created in this industry,” says Spoke. “To me, it means that you can’t build services for crypto the way you would have built services for banking or traditional financial products. And when you try to blend these two worlds, it creates these pretty significant blow ups.” 

Spoke says wealthier countries like Canada will have more people exposed to alternative investments like cryptocurrencies, and those people will be far more interested. 

“There’s a lot of hoops you have to jump through to understand crypto to begin with, and it’s not something that’s all that approachable to people that don’t have a certain level of basic financial sophistication,” says Spoke.

While Canada and Germany are among the countries with the most online searches for cryptocurrency, the countries with the highest levels of actual cryptocurrency investment fall outside the world’s most advanced economies in the G7. 

According to CEOWorld Magazine, the United States is just the 14th most invested country in cryptocurrency per capita, with developing economies like Nigeria, Thailand, the Philippines, South Africa, and Brazil falling within the top ten.