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How a Century of Progress Changed Christmas

Blog Post | Cost of Material Goods

How a Century of Progress Changed Christmas

Why O. Henry would be shocked by holiday giving in 2025.

Summary: A century ago, Christmas gifts often required major sacrifice, as most families devoted much of their time and income to basic survival. Today, material progress has transformed gift-giving into something easily affordable. While the meaning of generosity endures, Christmastime has been changed from a season defined by scarcity into one shaped more by choice and plenty.


On a cold December day in 1905, the American writer O. Henry (William Sydney Porter) introduced the world to two poor young lovers with hearts of gold. In “The Gift of the Magi,” Della cuts her beautiful knee-length hair to buy her husband Jim a gold chain for his watch. Meanwhile, Jim sells his watch, a magnificent family heirloom, to buy his wife a set of ornate combs for her hair. Their love for each other motivated them to sacrifice their prized possessions in the spirit of Christmas giving.

We still read the story because the emotion is timeless, but the material world its characters inhabit has almost vanished. In 1905, the average American household did not have electricity or running water, let alone the opportunity to buy gifts manufactured worldwide with two-day Amazon delivery. Light came from candles or kerosene. Water was carried or pumped. Heat required daily labor and fuel. Most time and wages went towards basic survival.

According to the U.S. Bureau of Labor Statistics, households on average spent over 42 percent of their average wages on food in 1901. In O. Henry’s story, Jim is said to have spent $8 of his $20 weekly income, or an additional 40 percent, on renting not a whole home or apartment, but a mere furnished room for him and his wife. That left $3.60, or $132 in 2025 dollars, for everything else—firewood or coal for heating and cooking; candles or kerosene for lighting; soap, lye, and cleaning supplies; replacement shoes and work clothes as they wore out; basic medical care and medicines; postage and newspapers; and the ever-present risk of emergency expenses. And, of course, Christmas gifts.

Before modern manufacturing, the most basic items required many hours of work. A comb could cost half a day’s labor—a watch chain, several days’ worth. Contrast that with today, when the very ease of gift-giving can feel almost embarrassing. The time price of a comb—once measured in hours—is now measured in minutes. A watch chain that would have taken a week of labor to afford in 1905 can now be purchased with a single hour’s wages.

Material abundance has accelerated so dramatically that some of us now worry not about whether we can give but whether we are giving too wastefully—plastic toys used once, novelty items that break by New Year’s, and holiday packaging that fills recycling bins to the brim. Where Jim and Della confronted problems of scarcity, we confront problems of prosperity.

Today, because material goods demand so little labor, the most meaningful gifts often return to the immaterial: a sentimental note, a memorable experience, or a handcrafted gift. That doesn’t mean you shouldn’t wish for those noise-canceling headphones or a virtual-reality headset. The modern economy offers goods that would have been fantastical luxuries or science fiction for our ancestors. But goods as gifts become even more meaningful when their purchase involves saving, budgeting, and sacrifice. Thankfully, buying a meaningful gift rarely requires giving up one of the few prized assets a household owns.

This Christmas, during a season when gifts can be purchased in minutes and delivered in hours, it is worth remembering O. Henry’s landscape of scarcity. Our world is richer not only in goods but also in freedom and choice.

Congressional Budget Office | Income Inequality

Bottom Incomes Rose While Top Incomes Fell in 2023

“In 2023, average income before transfers and taxes rose for households at the bottom of the income distribution and fell for those at the top. Income increased by 5 percent among households in the lowest quintile (or fifth) of the distribution from 2022 to 2023. (All measures of income in this report have been adjusted to remove the effects of inflation.) By contrast, income decreased by 9 percent among households in the top 1 percent. That decrease was largely due to a reduction in realized capital gains. Average income from other sources, on net, remained relatively unchanged among households in the top 1 percent.”

From Congressional Budget Office.

TechCrunch | Infrastructure

Autonomous Trains Could Make Short Hauls Pay

“The railroad industry was one of the first to disrupt how the world worked with technology, but lately, innovation in freight railroading has amounted to little more than longer and longer trains.

That has led many railroads to abandon shorter routes, ceding a chunk of the $1 trillion surface freight market to trucking companies. But as diesel prices reach record highs, some of those very trucking companies are going bust, leaving a hole in the market. Recently, at least 16 trucking companies went bankrupt over only a few weeks.

Parallel Systems might have a way to keep freight moving while allowing railroads to recapture market share. The startup has developed a rail vehicle capable of moving over several tons of freight as far as 500 miles without an operator. If the company can scale production of its Panther vehicles, it stands to make railroads profitable over short hauls once again.”

From TechCrunch.

New York Times | Trade

WTO Raises Global Goods Trade Growth Forecast

“The World Trade Organization said Thursday that it expected the global trade in goods to grow by 3.9 percent this year, almost double the rate it had forecast in March, as spending on expensive chips and other equipment needed to produce artificial intelligence boosts cross-border commerce.

The rapid trade in A.I. goods more than offset the drag on trade from the war in the Middle East and tariffs issued by the Trump administration. The W.T.O. expects trade growth to pick up slightly next year, accelerating to 4.1 percent.”

From New York Times.

Buenos Aires Times | Economic Growth

Argentina May See Three Straight Years of Growth

“The World Bank on Tuesday reduced its growth forecast slightly for Latin America and the Caribbean, while predicting Argentina’s GDP will increase 2.1 percent this year.

In its biannual Regional Economic Update, World Bank experts highlighted Argentina's economic recovery, noting that the economy expected to post growth for three successive years to 2027 – the first time it will have done so in nearly 20 years.

The improvement, the report said, is driven by 'fiscal consolidation, tax reforms and a more open economy.'

Argentina’s economy grew by 4.5 percent last year and will grow by an estimated three percent in 2027, said the report.”

From Buenos Aires Times.