Each year, Americans spend more money on gifts than the annual GDP of a medium-sized country. However, when you look at how often these gifts are returned, it’s clear that we don’t always spend wisely.
In fact, according to economist Joel Waldfogel, billions of dollars are wasted every year on gifts that nobody really wants. In his now-infamous paper, The Deadweight Loss of Christmas, Waldfogel uses the results of two surveys to calculate that between a tenth and a third of the value of all Christmas gifts is lost each year because many recipients value their gifts at dollar amounts much lower than was actually paid for them.
For example, a portable speaker that cost you $100 is worth about $10 to the friend you gave it to because she already has one, meaning that, somewhere along the line, ninety dollars worth of value has disappeared.
The problem is that gift-givers and gift-receivers have different ideas about what makes a gift “valuable”. So, where are we going wrong?
MYTH #1: GIFTS SHOULD BE ENJOYED IMMEDIATELY
We tend to think that a valuable gift is one that makes the recipient feel surprised / delighted / impressed / touched when they receive it. We focus on the “moment of exchange”, when we will hand the gift over and hopefully bask in a chorus of “oohs” and “aahs”. Whether or not those reactions last any longer than the moment of exchange, though, is not something that we give much thought to.
Gift-receivers, however, have different priorities. They want something that’s useful, convenient, and well-made, something that will give them value and happiness over time. So, although it might not be exciting to watch a loved one open the gift of a subscription to The Cheese of the Month Club, if you really want to make them happy, you’ll forgo the “Ta-da!” moment and focus on finding a gift with longer-term benefits.
MYTH #2: GIFTS SHOULD REFLECT THE RECIPIENT
Contrary to popular belief, instead of focusing on the recipient of your gift when you’re trying to come up with an idea, research suggests that you might be more successful if you think about what you would want. One way to kick-start the process is to make a list of the similarities between you and your recipient — this is supposed to put you in the mindset of the person who is receiving the gift.
Common knowledge also states that it’s better to give a gift that mirrors the recipient’s preferences. However, gifts that reflect the giver’s identity are valued, too. In fact, research has shown that gifts that reflect the giver’s “true self” can lead to greater feelings of closeness and trust than those that reflect the giver’s “knowledge of the recipient”.
Which is especially handy if you have to buy a gift for someone you don’t know that well yet. Researchers suspect that one reason giver-centric gifts can have a more positive impact on people’s relationships than those that focus on the recipient is that getting it right can be difficult, and the less you know someone, the higher the risk of getting it wrong.
So, if you’re a librarian, select a book by your favorite author, or if you’re an enthusiastic amateur baker, bake them a cake. They’ll love you all the more for giving them a piece of you. But don’t do this too often… In the words of the authors of the study, “It is possible that offering repeated giver-centric gifts may backfire because it could signal self-obsession or narcissism.”
MYTH #3: GIFTS SHOULD BE DESIRABLE
Gift-givers tend to think that gifts should be fun, high-quality, out of the ordinary items that a person wouldn’t normally buy for themselves, but recipients tend to prefer gifts that are useful and convenient. Such gifts make them happier and make the giver seem more caring and thoughtful.
So, let’s say your friend loves Italian food and you narrow your gift choice down to a gift certificate to an Italian restaurant. One restaurant has 2 Michelin stars but is located in another town, the other is a cheaper — but nice — place just a short walk from where your friend lives.
You might be tempted to choose the first option because it seems more special, but research suggests that your friend would probably prefer the easier, more convenient option to the fancy place that’s harder to reach.
Gift cards are also underrated. They’re often seen as a last resort for the unimaginative gift-giver or the unfamiliar recipient, but this is unfair. Research has shown that when people are given gift cards, they feel able to treat themselves to items they might not normally buy because they feel less guilty paying for them.
MYTH #4: GIFTS SHOULD BE TANGIBLE
We generally don’t like to give experiences as gifts because the moment of exchange is relatively dull. Some boring stand-in that gets handed over — a voucher or a certificate — and the response is generally bland at best. And choosing an experience for someone is risky; it’s more personal than buying a material gift because it requires more specific knowledge of a recipient’s preferences, and there’s a greater social risk of giving a poorly matched gift.
However, experiences — like a weekend getaway, a beer subscription, a chocolate-making class — are perceived as more unique than material goods. People look forward to them more, and experiences give them more to talk about than the usual material gifts that get doled out each year. They also tend to bring people closer, regardless of whether the gift-giver and recipient enjoy the experience together.
Research has also revealed that we feel more gratitude for what we’ve done than for what we have. A team of researchers from Cornell University and the University of Chicago looked at 1,200 online customer reviews — half for experiential purchases like nights out at the theater and hotel stays and half for material purchases like clothing and jewelry — and found that reviewers were more likely to mention feeling grateful for the experiences.
This may partly be due to the fact that, unlike material possessions, experiences trigger fewer social comparisons and are more likely to make people appreciate their own circumstances. The researchers also found that thinking about a meaningful experiential purchase caused participants to behave more generously toward others than did thinking about a material purchase.
The thinking is that the gratitude for the experience results in a strong urge to somehow express that feeling in action by, for example, giving to others, even those we will never meet and who will never know how generous we were. An experience gift is truly the gift that keeps on giving.
MYTH #5: GIFTS SHOULD BE EXPENSIVE
We often focus too much on the price of the gift, incorrectly believing that others focus more on relative value than they do on thoughtfulness. The more expensive a gift is, the more thoughtful we think it seems, and the more we expect the recipient to appreciate it.
Part of the problem seems to be that gift value is easily understood and compared. So, when trying to find a gift that will make someone happy, choosing an expensive one seems safe. By contrast, thoughtfulness is a vague concept. Something that seems thoughtful to one person may not to another, so the risk of choosing the wrong gift is higher.
However, research consistently shows that, as long as your recipient thinks that you put some effort into making your selection, they appreciate expensive and inexpensive gifts equally. And don’t be afraid to opt for small and sentimental. People don’t give sentimentally valuable gifts as frequently as recipients would like because they’re afraid of missing the mark, but a framed photograph of you and your best friend having a good time may bring more happiness to them than a $25 gift voucher to their favorite store.
Just don’t tell someone if you bought their gift in a sale. No matter how expensive the gift is, a discounted gift reduces the recipient’s happiness and their appreciation because the rebate seems to belittle the thoughtfulness, even when the gift is something they’ve asked for.
MYTH #6: GIFTS SHOULD BE A SURPRISE
We’re often reluctant to ask people what they actually want. It’s not that we want to willfully disregard their wishes, but we’d like to think that we’re close enough to them not to have to be told what to buy. Also, asking them will inevitably diminish the surprise / wow factor of the moment of exchange. Unfortunately, our powers of mind-reading are lacking and perhaps we would do better to just honor their requests.
In 2011, two behavioral scientists tested this theory in a series of experiments which compared how much people appreciated gifts that were requested via a gift registry to those that were picked by the gift-giver. The results were unequivocal: though the gift-givers assumed that the unsolicited gifts would be considered more thoughtful and considerate by their intended recipients, the latter strongly preferred the gifts they had explicitly requested.
So, as it turns out, even though we know that the thought does count, it may be the thoughtless gift — the one that just comes off a person’s wish list — that will be appreciated most. This holiday season, consider making things better for everyone: just ask.
Finding the right gift for someone can be a daunting challenge and we don’t always get it right.
Armed now however with the most up-to-date psychological research, hopefully you can adopt a more successful approach to gift-giving.
Are you ready to open your gift?
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