The last of the big spenders

IT HAS BEEN another tough week for Irish consumers. A two-day hair-shirt budget, fears of a double-dip global recession, and growing uncertainty about the future of the euro have left consumer sentiment on the floor and cast a black cloud over what is supposed to be the most wonderful time of the year.

But despite the gloom, restaurants and shops are busy as people go about having themselves a merry little Christmas, whatever the cost. And for most people that cost will be substantial, with few households likely to have much change from €1,000 once the bells ring in the new year, according to a study by Deloitte. But why do people spend so much, particularly when so many have so little?

A sickly boy from Victorian England is at least partly to blame. From the end of the 17th century, a mix of puritanical zeal and the Industrial Revolution had all but killed Christmas. Then, in October 1843, Charles Dickens sat down to write A Christmas Carol. It took him just six weeks, but his book set the template for Christmas and created the great expectations of today’s children. It gave us the phrase “merry Christmas”, made presents the norm and even ensured that an outsized bird would become the centrepiece of festive dinners in the West for the next 170 years.

Dickens, in a noble effort to highlight the role of education in counteracting poverty, made Christmas a festival of generosity and moved it away from the unpopular religious festival it had been. December 25th became “a good time: a kind, forgiving, charitable, pleasant time . . . when men and women seem by one consent to open their shut-up hearts freely, and to think of other people below them as if they really were fellow-passengers to the grave, and not another race of creatures bound on other journeys.”

Dickens would no doubt be turning in his grave at the sight of Christmas in Ireland, with its plastic toys, games consoles, calorific food – and, for many, mountains of debt.

For at least 10 years Ireland was top of the European league of seasonal spenders. In 2008, the high-water mark, Irish households spent an average of about €1,300 on Christmas, compared with a European norm of half that, according to Deloitte, which surveys spending expectations in September every year.

Each year since, that sum has fallen but the average Irish household will spend close to €1,000 on Christmas this year – still top of the euro spending pile. The most recent Deloitte survey reported that each household expects to spend an average of about €943, down from €1,020 in 2010 and a reduction of €411 since 2008. The Dutch will spend closer to €250, making them the most frugal folk in Europe.

Irish households plan to spend an average of €520 on presents, €258 on food and €165 on socialising. “Through the last number of years, it has been abundantly clear that despite the fiscal pressures they face, the desire to embrace Christmas and enjoy the festivities has remained strong,” says Richard Howard of Deloitte. Or, to put it another way, we may have nothing, but we’re still spending like we had everything. This profligacy comes at a cost. The Irish League of Credit Unions says Christmas will leave 38 per cent of us in debt, and some people will take seven months to pay it off.

WHAT MADNESS IS this? And what drives people to spend money they don’t have on things they don’t need in the name of good cheer?

Dr Mark Harold, a behavioural psychologist who has worked in both Ireland and the US, believes a key reason people overspend is that they see giving gifts as “a way of expressing affection. Like it or not, people measure levels of affection by how much they spend. The reality is that, culturally, we are not a very expressive people,” he says. “We also buy and cook so much food as an expression of affection for our families. All you have to do is think of the traditional Irish mammy feeding up her sons or putting on a big spread when she has nothing. It is an expression of pride – and, to some degree, love.”

Dr Harold says that most often it is those who can afford it the least who spend the most over Christmas, and in his experience it is people in working-class communities who push themselves to the brink to ensure their children have everything. This leads to a depressing reality in which people borrow from loan sharks and accumulate unsustainable credit-card bills.

“People should remember that it is not the money that is spent or the size of the gifts that people remember. When people get older and look back on their Christmases they remember the dinner, pulling crackers and dressing the tree. The myth is that you can buy the perfect Christmas, but you can’t. No one can, and people certainly won’t make Christmas better by overextending themselves.”.

The myth of buying the perfect Christmas is something the psychologist Prof Tim Kasser of Knox University, in Illinois, has tried to debunk. Kasser is the co-author of a paper, What Makes for a Merry Christmas?, that asks whether Christmas happiness is down to religious and family experiences – historically central to the celebration – or to materialism.

He sent questionnaires to 400 randomly selected people on December 26th, asking them to rate emotions they felt on Christmas Day. He found that "neither spending a relatively large percentage of one's income or going into substantial debt related to having a merrier Christmas". In fact the study found the opposite. Speaking to The Irish Timesthis week, Kasser pointed out that at this time of year, advertising is both ramped up and attached to the "idea that the purchase of gifts is the best way to show your love for someone. Everyone has a basic need to love and be loved, and we live in a culture which tries to connect love to purchase, so that businesses make a profit."

In effect, Kasser says, we have been conned by ads “showing happy children opening their presents on Christmas morning, or families joyously gathering around the various types of food that has been purchased.” People want these feelings, “and advertisers and the culture as a whole connect those feelings with purchase. But our study on Christmas showed that a focus on the materialistic aspect of Christmas was negatively associated with happiness at Christmas.”

Kasser’s study resonates with Meindert Postma, who comes from the most Scrooge-like country in Europe – at least according to Deloitte. He grew up in the Netherlands but now lives in Monkstown, Co Dublin, with his wife and two young children. He will end up spending four times more than his peers at home.

He says that his countrymen are not mean, “although my wife may disagree”, and that Irish people spend too much, although he accepts that some of his disapproval stems from the Calvinist tradition in which he grew up.

When he came to Ireland he was bemused by the shutdown on December 24th and is still amazed that the airport and most restaurants close on Christmas Day. In the Netherlands, Christmas is a simple two-day event. “We get Christmas Day and St Stephen’s Day off, but if they fall on a weekend it is just tough luck. We go back to work on Monday as normal. We don’t get an extra two days off.”

As well as the extended holiday, Santa is new to Postma. He discovered Santa lived in a grotto only two years ago when he took his twins, then aged two, for a visit. “We don’t have the cult of Santa Claus, and I think that limits spending in the run-up to Christmas.” He points out, however, that the Dutch celebrate the feast of St Nicholas on December 6th with presents and a meal.

Mark Harold believes people “need to take on board the fact that going the extra mile and spending money they don’t have will not make Christmas better. For most of us, it doesn’t matter what we get: we get more enjoyment out of what we give and a thoughtful present.”

He does have one caveat. The aggressive marketing of toys aimed at children in the run-up to the day “can get a child set on something, and then if they don’t get it that can be very upsetting for them”. And although he might be dispassionate about spending, and even suggests that a little bit of disappointment or adversity builds character in young people accustomed to getting whatever they want, he admits that in practice he too will do all he can to avoid that upset for his own children.

THIS FEAR OF disappointing children is felt by many parents. Bettina MacCarvill, a partner at the Dublin-based consumer insight agency Jump!, says many of the parents she has spoken to are anxious to protect their children from the recession. “Parents will be trying to meet the expectations of their children, and some of those I have spoken to feel absolutely wretched that that will have to say no, they feel as if they have failed.”

But MacCarvill is upbeat about the weeks ahead and believes that people “will try and make Christmas special and forget about the doom and gloom that has hung over them for so long. They will have a bit of a splurge if they can afford it and forget the penny-pinching for a few days. And where’s the harm in that?”

'I will definitely overspend'. Shoppers on Henry Street this week

LEANNE FINNERTY

We came to Dublin from Mayo last night, so we’re proper culchies. Christmas costs a lot, but I think it is costing much less now than it was a few years ago, and we are all more sensible now than we used to be, not out of choice but out of necessity. There are only three of us, and I think we will spend around €500 this year. We are quite careful, and we will be reusing things such as decorations. I will spend on my credit card, but I will be able to clear it in the new year.

ORLA O’DEA

I’m at college in Dublin. I’d say I will probably spend only around €60 on presents and maybe another €100 on going out. I like Christmas, but I liked it a whole lot more when Santa used to come. My parents [in Tipperary] are very good with money, and they have passed that on to me. I don’t think I will be spending money I don’t have.

LIZ BELL

We lived in Australia for many years and came back to Ireland only five years ago. When we came back, I thought the level of spending was obscene. You’d almost have been killed in a stampede doing your shopping in Smyths. In Australia, everything is much more understated, and Christmas lasts a single day. Do I miss it? I miss the weather.

EAMON BYRNE

I don’t think Christmas is a particularly big deal, and it is definitely overrated. Even so, it is very expensive when you go out a lot, and I will overspend. Come January I will be looking at my bank balance and thinking, Maybe I shouldn’t have done that. I will probably get through €1,000-€1,500. It is an expensive time of year.

TONY BREEN

My wife, Rita, and I live in Portugal, and it is much less busy there. Here it seems that things are very busy and people are spending a few quid, which is a good thing. They are not spending in Portugal right now. It is good to see the activity here. For a family with a couple of children, I don’t think €1,000 is unreasonable. Things are dearer here, though, that’s for sure. We’ve just been for a cup of coffee, and I nearly had a heart attack.

Low expectations: Preparing the children for a modest Christmas

Paul and Edel Maher,

who live in Carrickmacross, Co Monaghan, have 11 children under 13. They have helped the children understand that Santa will give each child a big present and a small one. Sometimes the big present is shared; last year, seven of the siblings received a PlayStation3 between them.

“For other families a big present might be something huge, but a big present to our children would be a lot smaller than what it would be to other families,” saysPaul. “We explain there are 11 children and Santa has to go to other families too . . . The children don’t ask for a whole lot, either; they are not the wanting type.”

Paul and Edel’s children also participate in a Christkindl with aunts and cousins. He is keen to point out that the children still use and play with last year’s gifts. “I think people become overwhelmed by Christmas . . . There is as much or as little pressure in the Christmas period as parents allow themselves fall into . . . If a child has everything they ever wanted, what are they going to hope for as they grow up?”

In Clarecastle, Co Clare, Angie Parry, a married mother of two, says “My children get two things and a surprise, and they have to prioritise. I know some kids get lots of things but I say to mine, if Santa gave some children lots of things there wouldn’t be enough to go around . . . The main thing I think is that, recession or no recession, even though it is a magical time, you need to keep it real.”

The Money Advice and Budgeting Service (Mabs) advises families to make a Christmas budget and stick to it. It also asks people to be sensitive around those who might not be able to afford glitzy presents.

"We are advising that a conversation should take place around the family table, particularly with older children. For families who say no to their children for the previous 11 months, they make a huge effort to make Christmas memorable, so it can be hard to strike a balance." - BRIAN O'CONNELL