This column first appeared in print on January 31, 2007 in that day’s issue of the Inter-County Leader.
I’m so bad at giving presents that my wife has taken to buying, wrapping, and then happily opening her own gifts so our children will think I actually got her something. As a grown man, part of me is a little embarrassed by this. Yet, another part thinks, “Is this cool or what?”
It’s true though. I’m just not good at giving gifts. I think the closest I’ve ever come to getting it right is a gift card. So, obviously, I’m a big fan. Probably not as big a fan as Brad Anderson, but then (as you will see), we like them for different reasons.
I like them because gift cards are easy. Almost as easy as cash. The problem, however, is that “easy” does not necessarily mean “valuable.” Giving value is a real art form—one I’ve never fully appreciated. Still, Valentines Day is right around the corner, giving me yet another opportunity to at least try to color within the lines.
According to economists and authors of Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, Stephen J. Dubner and Steven D. Levitt, say giving a gift is a way for one person to tell another that he is a) thinking of her; b) cares about her; and c) wants to give her something she’ll value.
They go on to explain that it is relatively easy to give “valuable” gifts to children. Most children can’t drive themselves to Toys ‘R’ Us and don’t usually have access to much money. So, it’s hard to miss with a child because the gift automatically expands their reality.
Adults are different. Most of us are free to purchase almost anything—regardless of cash on hand.
“So ideally,” say Levitt and Dubner, “you’d want to give her something she might like, but doesn’t know about, or some kind of guilty pleasure that she wouldn’t buy for herself. In either case, you are creating value by giving something that is actually worth more to her than the money you spent on it.”
Sounds easy, right? Not quite. Gifts are often “mismatched with the recipients’ preferences,” says Joel Waldfogel, another economist who wrote a paper with the heartwarming title of “The Deadweight Loss of Christmas.” According to Waldfogel, most gifts (economically speaking) are inefficient.
The good news is it’s not about how much money you spend. The bad news is it’s really about how valuable your gift is to the recipient. So, economically speaking, when you want the most bang for your buck, it’s better to give cash.
So if finding the right gift is really just a crapshoot anyway, why don’t we give cash? According to the survey Waldfogel used to support his claims, grandparents give cash 42 percent of the time. Parents, 10 percent. Significant others—never. Obviously what we’re dealing with here is some sort of social taboo.
So, if cash is too cold, and buying a gift is too hot, then wouldn’t a gift card be just about right?
They’re easy to buy, easy to give, and easy to use—or, I guess, not use. Which brings me back to Brad Anderson. Remember Brad Anderson? The guy who likes gift cards even more than I but for different reasons?
I like gift cards because I’m not that imaginative and don’t want to be penalized for it by wasting money on a poor gift.
As CEO for Best Buy, Anderson likes them because last year his company made $16 million on gift cards that were never used. According to Tower Group, a financial-services research firm, roughly $8 billion of the $80 billion spent on gift cards in 2006 will never be redeemed. Other surveys estimate that a full 19 percent of the people who receive a gift card never use it.
So what does this mean, if anything, to a poor chump who just wants to improve his gift giving skills? Is a gift card still an option for this Valentines Day? Obviously, Anderson would say yes. The economists, while they like the efficiency of the idea, warn that the card might only end up lost in the deep end of a purse.
I guess if I’m really committed to being a better gift giver, I’m going to have to fire up my imagination and get busy. Or maybe I should just stick with what works, do nothing, and enjoy what my wife gets herself (from me) this year.