Economics & History

Gift-Giving vs Cash: Why?

No.09

 

Occasionally, you might receive a gift that hits the spot.

It’s exactly what you would have bought for yourself with the same amount of money.

However, we’re all too familiar with those that miss the mark.

Remember that dodgy shirt your aunt got you last year?

With this being said, is there a way to avoid such embarrassment? Would we be better off giving cash instead?

After all, rational choice theory implies we could avoid the problem of such gifts if we simply popped some money into a card.

Despite this, virtually every society in the world continues to engage in gift-giving.

But why?

Why does gift-giving still exist?

The fact this custom has persisted should not be taken as evidence that we’re all stupid.

What it suggests instead is rational choice theory may fail to capture something very important about giving gifts.

For example, one purpose of giving a gift is to express affection for the recipient.

A thoughtfully chosen gift accomplishes this in a way cash cannot.

Another purpose may be that some people have difficulty indulging themselves with even small luxuries. As such, they might feel compelled to spend cash gifts on purely practical items.

For these people, a gift provides a way of enjoying a small luxury without having to feel guilty about it.

This is supported by the fact we rarely give purely practical gifts like washing up liquid or laundry detergent.

Whatever the real reasons people may have for gift-giving, it’s safe to assume we don’t do it because it never occurred to us to give cash.

Sometimes cash gifts are given.

As a student, I’m always grateful for such presents.

Typically, however, even though there are advantages to gifts in cash, people clearly seem reluctant to abandon the practice of giving in kind.

Personally, I think that’s a good thing.

What do you think?

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2 thoughts on “Gift-Giving vs Cash: Why?

  1. “…rational choice may fail to capture something very important about gift-giving.

    One purpose of giving a gift is to express affection for the recipient. A thoughtfully chosen gift accomplishes this in a way cash cannot.”

    BINGO!

    I’ve thought about this myself; giving cash is just much more efficient! But that’s an intellectual conclusion; one that doesn’t hold up well in the real world where people may be offended by a cash gift (i.e. “You don’t know me well enough to think of a gift for me, or you just didn’t bother to take the time?”).

    If people may be offended by the logical choice, then this tradition clearly isn’t about logic–it’s about emotions. Since we’re not computers (or Vulcans), we need to recognize those domains in which logic takes a backseat to emotion. And it’s best if we refrain from passing the kind of judgment I often see in academic papers on topics like this…

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    1. Thanks for your comment Froogal Stoodent.

      I think you’re absolutely right. Traditions like this are based almost purely on emotion and sometimes it’s easy to think about things too rationally.

      We economists aren’t always so keen in dealing with emotion though so I totally understand this sort of judgement. I’ve been guilty of it in the past so I can’t lament it too much!

      Like

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