No this is not going to be some sappy post about world peace or loving the planet. This is as practical as it gets (and a bit controversial, if my wife’s reaction is any guide). As I sit here today typing away, there are 25 shopping days until Christmas. You cannot turn the news on without seeing or hearing a story about how this shopping season is going. Retailers often do 50% or more of their business between Halloween and New Year’s Day. But when we buy a gift, for Christmas, Hanukkah, Kwanza, Birthday, Anniversary or some other special event, what are we really giving to the recipient?
The concept of gift giving goes back deep in our human roots. In the earliest recorded history of civilized human kind we have examples of people giving sacrifices of valuable goods to their gods in order to show love, respect, fear (or just curry favor). These early “gifts” became a way that humans showed love and respect to and for each other. Through time, the process has become more and more commercialized until now when you can actually find Arbor Day cards from Hallmark (I wish I were kidding). Gift giving has never been more deeply in our psyche. And it is never clearer than at this time of year.
But what of my earlier question? When we give a gift to someone, what are we really giving? One of my favorite sit coms is “The Big Bang Theory”. In one of the early seasons, Penny gives Sheldon a Christmas present and he responds with “You haven’t given me a gift, you’ve given me an obligation.” Sheldon’s point was that he now had to buy Penny a gift of similar stature in order to keep the relationship in balance. While that may be a bit over the top, there is some truth in the idea that if someone gives us a gift, we feel obligated to give them one back.
When you give a gift, how is it perceived by the person to whom you are giving the gift? Studies have shown that gifts are pretty much always perceived to be less valuable than the price the giver paid. If someone gives you a coat worth $100, research indicates that you will value the coat at around $80. Gifts lose an automatic 20% of their value immediately upon gifting. If you want a coat, and you shop and buy one you like for $100, the research tells us that you value that coat at $100 (or more if you got a good deal). Someone gives you the same coat for your birthday, and it’s worth $80 to you. It’s even worse for gift cards. The perceived value discount for gift cards is closer to 30%. You buy someone a $100 gift card for Dave & Busters, and the recipient values it, on average, at $70.
So what do we do about this? Stop giving gifts? That’s unlikely, but not a horrible idea (kidding). One thing that can be done is to give charitable gifts. When you donate money in someone’s name to a favorite charity, the value to the person you are giving the “gift” to is still less than what you are donating, but it also has value to the charity and their ultimate beneficiaries. So your gift is valuable to a broader group than just the one person.
But unless your recipient has told you specifically what they want, the answer for most of us is to just give cash. The usual push back on that idea is that it is so impersonal. That no thought goes into it. I hope that we all express our love and respect for the people in our lives often enough that, unlike the gods of old, they don’t need presents to know we love them. And, that if we are going to give someone a gift, that we want them to value it as much as we do. Cash is what makes that happen 98% of the time (I’m allowing 2% for you finding the absolutely perfect item that someone wants/needs/covets).
Clearly, with little ones, things are different. The holiday season can be a magical time for kids and we should (IMHO) help that last as long as possible. Once it’s gone, it’s gone forever. But for the rest of us, the research is clear. Other than your love and a good warm hug and kiss, good old cold, hard cash is the best gift you can give.
Happy Holidays Everyone!
Until Next Time, FIRE On! – Oldster