Gift Giving: Appreciation Directly Proportional to Price?

Gifts can become deadweight losers. (Japanesestyle gift-wrapping; Wikipedia image)

A study published in the Journal of Experiential Social Psychology had shown that there is no relation between the price of a gift and the appreciation of the recipient for the gift. It seems contrary to popular thought, but the fact is that a lot of gifts given on special occasions like birthdays and anniversaries actually constitute what economists call “deadweight loss” which means that some gifts aren’t really loved by the recipient.

Economists Kristine Principe and Joseph Eisenhauer had co authored the study that showed that expensive gifts does just as well in terms of deadweight statistics as compared to the cheaper gifts. The researchers did a survey on gifts received by a hundred and five subjects (mostly college students) which had the price tag attached or easily available. In economics, the difference between what the gift receiver would have paid for the gift and its actual price is the deadweight loss. In the study, the average figure for the deadweight loss came in at seven percent of the market value. This means that even low-priced gifts could be valued more in the eyes of the recipient if it’s the right one. Surprisingly, gift cards, which people turn to when they can’t decide what gift to give, gave a deadweight value of fourteen percent in the study.

The gifts with the highest deadweight value of over twenty five percent consisted of accessories, leather goods like wallets and belts, books, culinary gadgets, musical instruments, and vehicles. The gift givers in these cases were spouses, girlfriends, in-laws, and grandparents. The gifts from parents scored better in the deadweight area. The results showed that if the recipient is a female, then it’s likely that she will give clues as to what she wants to get for her birthday or for Christmas, and thus, the deadweight gift percentage in this case is lower.

The deadweight gift research generally gives people a reason to ask the recipient of a gift what he or she wants. If that is not possible, then a little research can help and and information can be gathered if they simply ask the people who know the recipient what gift will be appreciated. Clues can also be given by the recipient’s lifestyle and hobbies. The gift-giver only has to be careful so as not to give the same gift as the others. If this happens, even the much-appreciated gift can turn out to be a nightmare for the recipient if there’s one too many.

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