When we think of gift-giving, our thoughts are more along the lines of thoughtfulness and festivity than irrationality and inefficiency. But many economists beg to diverge from our tinseled cheer and insist that the reason gift-giving presents so many problems is that it's a wholly inefficient transfer of money carrying too many undertones.
Gifts Are Trouble, But Money Is Worse
The exception [to the rule that gifts are inefficient] is money. You determine exactly how much you care about the recipients in dollar terms and then allow them to use the money optimally to fulfill their desires.
What Does The Gift Say About The Giver?
A cash gift may be tacky, but we know for a fact that gift cards—cash with holiday trimmings—are increasingly less so. One thing gift cards are light on is pressure: Studies find that recipients place great stock in the gifts they are given, and use them to evaluate how well the giver “gets” them. The giver of a gift card can easily “get” that the recipient wants to choose her own gift. Most interestingly, people with the closest relationships—spouses, for instance—are the least apt at recognizing the other person’s preferences, instead substituting their own. Men tend to judge this disconnect harshly, attaching all sorts of dire predictions to an unsatisfactory gift. Women are more forgiving—or more apt to deny the indication of an increasingly distant relationship.
It Isn’t The Thought That Counts
And when it comes to the whole idea that “It’s the thought that counts,” it turns out that we aren’t walking the walk. After a conflict, recipients given more expensive gifts along with an apology for the giver’s transgressions were more convinced of the giver’s regret. A more expensive gift apparently indicates a higher level of sincerity, but those of us who have ever received a proper apology may disagree. A poor gift doesn’t always reflect poorly on the giver…except when it does. In the case of the displeasing gift, is it the gift or the giver who changes your mind?
There’s Still Some Christmas Spirit Left
To allay some of your ensuing gift-giving fears after reading those Grinch-tastic findings (sorry!), know this as well: It is indeed better to give than to receive (we agree, which is why we issued the LV Challenge). From Smart Money:
A 2008 study published in Science suggests that it is actually better to give than to receive. People who spend on others reported more happiness than those who spent more on themselves.
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