Value perception abounds in gift giving

In this season of giving, what makes the best gift?


Say for instance Aunt Petunia and Uncle Vernon have given you a sweater for Christmas. Is that a good gift? How much do you value it? Research by economist Joel Waldfogel suggests that gifts by aunts and uncles are valued by the recipients at 64 percent of the estimated amount paid by the giver.

Grandparents do marginally worse at 63 percent. However, parents and siblings hit 86 percent and significant others top 91 percent. Friends do the best at 99 percent.

In other words, those that know you the best give you the most economically appreciated gifts.

But all is not lost for that beautiful sweater you will wear once when you visit your father’s sister. Perhaps the giver gained a substantial benefit from shopping for your present, or you appreciated the thought they put into it. Sentimental value may make gift giving a positive exchange. People value receiving gifts, not just the objects they receive.

So how can you increase the value of your gift? Give cash!

About 37 percent of aunts and uncles and 58 percent of grandparents give cash, while less than 2 percent of friends and significant others do. Cash can be spent as the recipient most desires, as opposed to the giver. Gift cards are another favorite gift, but 10 percent of them go unspent (as I found recently when I had to throw away some vouchers to a restaurant I had bought at a school auction. They had expired. At least the school benefited!).

This idea of giving can also been seen in corporate donations. For example, TOMS shoes has given 60 million pairs of shoes to children in need, one for each shoe purchased. You may think this is a great corporate social responsibility program, right? Wrong! Academic researchers found that it did not improve shoe ownership (older shoes got thrown away) or the recipients’ health. It also increased aid dependency. Moreover, poor children are probably more worried about other things, malaria for example, or where their next meal is coming from.

Talking about feeding the hungry, the TV show Adam Ruins Everything highlights the inefficiencies of canned food drives. Although one in seven Americans rely on food pantries, those food pantries throw away about half the food donated because it has passed its use-by date or is unhealthy.

Genevieve Riutort of the Los Angeles-based Westside Food Bank says the “best way to help a food bank is to donate money” so they can buy at wholesale prices and also work with farmers to provide nutritious food.

All this is not to say gift giving or charitable acts are wrong. By no means. What it highlights is the need to understand what the recipient needs. And if you cannot, give cash!