Giving to my Wild Self

by on December 21, 2006 at 7:20 am in Economics | Permalink

The economist in me says the best gift is cash.  The rest of me rebels.  Some people argue that the reason we don’t give cash is because that is too easy – to show that we know the person well we must signal by shopping for something "special."

Yet this can’t be quite right, either.  Imagine the following thought experiment.  Someone gives you $100 cash.  You go out to the store and buy a set of car tires.  Purchasing the tires clearly maximizes your utility.  Now imagine that instead of $100 the gift giver gave you a set of car tires.  Would you be happy that they know you so well that they purchased for you just what you would have purchased for yourself?  I don’t think so.

The example illustrates that we want the gift giver to buy something for us that we would not have bought for ourselves.  Or more precisely one of our selves wants this – the self that is usually restrained, squashed, and limited, the wild self, the passionate self, the romantic self.

Gift giving, therefore, is about reaching out and giving to the wild self in someone else.  Why would we want to do this?  Because we want the wild self in someone else to be wild about us. 

The bottom line?  If you want to please the economist in me, send me cash.  If you want to please my wild self (I know, not many of you, but you know who you are!) use your imagination.

 

josh December 21, 2006 at 8:01 am

Perhaps we would buy more “wild” things if there were no Christmas. We use Christmas to give each other the things we would feel worst about buying for ourselves. Everybody knows the drill and goes along with it.

jp December 21, 2006 at 8:54 am

Or maybe we give things instead of money because by giving things we somewhat disguise how much we spent, thereby deflecting cross-gift comparisons. (Relatedly, small children, who are not yet able to think in terms of amount spent, still make comparisons by counting the *number* of gifts each one gets.)

J. D. Harper December 21, 2006 at 9:18 am

The thing is that people are not rational enough to maximize their own happiness. In actuality, people let emotions–like fear and guilt–overrule the decisions that they would prefer to make.

For example, I would love to get a new video iPod, but since I’ve just graduated from college, I feel like I need to save money for my future instead. This is based in the fear that someday in the future I’m going to need that money for something.

Christmas offers a time for other people to scratch the itches that we can’t or won’t reach for ourselves. The costs and benefits are different. When we buy for ourselves, it’s just a matter of “is this product worth $X?” When we buy for others, we get additional benefits from pleasing someone else with something new and shiny. This benefit is worth a certain amount of money, which varies with how much we think that other person will like the gift in question.

I won’t buy a video iPod for myself, but my parents might buy one for me. My brother would never spend $40+shipping on a USB rocket launcher, but I would spend it on him so that I can see his face when he opens it.

hththth December 21, 2006 at 9:29 am

I don’t get it. If I needed tires for my car and friend purchased them for me as a Christmas present, I would be very happy.

eriks December 21, 2006 at 9:35 am

Lawrence White nails it. The best gifts reflect a person’s tastes, giving them something they didn’t know they wanted.

Bill Harshaw December 21, 2006 at 9:42 am

Obviously a bunch of economic men commenting. Having just read Robert Frank’s NYTimes column on the role of reason versus emotion in relationships, I’d say the best gift is one that shows the giver is committed to the relationship. (How about O’Henry’s Gift of the Magi?)

Tyler Cowen December 21, 2006 at 9:51 am

I once asked for a book of stamps.

dwight Meredith December 21, 2006 at 10:14 am

What I want to know is where one can get a set of tires for $100.

Mike December 21, 2006 at 10:46 am

If a friend or relative works selling and installing tires and gives
you tires (installed!) for Christmas, that would be great. But do
you think someone would value that gift less than if it had come from
a non-tire-selling/installing giver?

Chairman Mao December 21, 2006 at 11:33 am

Prof. AT,

Giving a gift other than cash is more pleasing to the giver than to the recipient. The giver gets a kick out of thinking that he/she knows you well enough to make you happier than you would be if you had the choice to buy something yourself.

As for the two versions of you; schizophrenia can be treated. I’m particularly concerned about your ‘wild side’ being left to roam free.

nick December 21, 2006 at 11:45 am

To be honest, I think people like receiving gifts because the giver is more likely to bypass the “giving limit.” My grandparents, for example, are more likely to spend over $50 (the prescribed family limit) on a gift than they are to hand over more than $50 in cash.

anonymous December 21, 2006 at 12:58 pm

“If you want to please my wild self (you know who you are!) use your imagination.”

Is Professor Tabarrok sending a kinky message to his wife?

Joon December 21, 2006 at 1:40 pm

I’ve found that the best gifts aren’t those that you wanted, but gifts that you never knew you would want. Anyone can buy things they always wanted with cash, only your true friends can surprise with a gift you could have never imagined.

Sisyphus December 21, 2006 at 2:25 pm

I think commenters have largely hit on what gift-giving is about, but have not put it together. It seems like gift-giving is a signal both that you can predict what will make a person happy, based on your intimate knowledge of their preferences (which is one measure of the depth of your relationship with them), and an intentionally imperfect signal of the value placed on the relationship, which should ideally trick someone into thinking you spent more than you actually did (which allows you to show the amount of your resources you are willing to expend on the relationship). Thus, the O’Henry story exemplifies the best in gift-giving, in that each character chooses a seemingly optimal gift for the other that requires them to sell their most valued possession. Cash fails at both purposes, because it fails to signal any information about your knowledge of the other person’s preferences, and because it exactly indicates the resource value you are willing to expend on the relationship.

Cash may be optimal in terms of material utility, but it fails to satisfy the actual reason that people give gifts, which is to show the value they place on the relationship (though other, reciprocal giving motivations may also apply).

aaron December 21, 2006 at 3:53 pm

The idea is that you should get a thoughtful gift they will enjoy that they wouldn’t get for themselves. It should reflect both your and their personality.

DK December 21, 2006 at 4:34 pm

IMHO, gifts primarily signal creativity, taste, and wealth, like most other forms of signaling. Anyone can give cash. Only someone hipper than you can give you a great album or book that you hadn’t heard of or a sweater you actually want to wear. The perfect gift is one that makes you feel that your cool friends are helping you become more cool.

Anon E. Mouse December 21, 2006 at 7:21 pm

My gf asked me what I wanted for Xmas. I replied a set of race tires (for my motorcycle) plus two track-days (days where a club, e.g., http://www.nesba.com, rents a racetrack–each person pays b/w $150 and $200 depending on the track).

Tires are special — when they’re $380 for a set of two (best deal on the internet) and last maybe a 150 or 200 miles.

Jacqueline December 22, 2006 at 12:26 am

My dad used to wrap $20 bills up in otherwise empty large boxes. That was fun.

Slocum December 22, 2006 at 8:08 am

“Maybe it’s just me, but whenever people have attempted to follow this theory in giving me gifts, I end up with things I have no interest in or use for (or which, when tried, turn out to be less helpful than whatever I did before I had them).”

Well, yes, giving people something you guess they’d like is a high-risk, high-reward approach, but I like it. Yes, I’ve gotten books I couldn’t bear to read, but also books I didn’t know about and loved — I find it a worthwhile trade off.

I would much rather receive cash OR something surprising–but I see no point at all in having people go out and buy me the exact thing I would have bought for myself otherwise, and I also dislike giving gifts like that. My wife sees something she likes but doesn’t buy it, but comes home to tell me about it. Then I have to go out and see if I can find it again (assuming it hasn’t disappeared in the meantime). Aaargh.

But the thing I hate above all are gift cards. At least if you receive some *thing* you don’t like, you can return it for cash. But gift cards, you’re stuck with (at least until they start expiring). But other people really like them! And think I’m being annoying when I point out that you’re turning perfectly good cash that never expires and can be used anywhere into plastic that does expire, can be used only in one place, and can’t even be converted back into cash (which makes them stupider than the world’s ugliest sweater — which at least can be returned for a refund).

speedwell December 22, 2006 at 9:42 am

Oh, you are so overthinking this. Fact is, we were trained as children to expect toys as presents, and we still expect toys.

triticale December 22, 2006 at 5:44 pm

Whosoever does not believe that anyone could consider tires special has no experience with automobile enthusiasts. As an extreme example, in a recent issue of a “rat rod kulture” magazine, a photo of an otherwise suitable fenderless old Ford is criticized in the caption for the apparent apostasy of radials.

The solution to the problem presented in the post is simple. Back when my son lived near me and was working lots of overtime, his present to me was earmarked cash. Enough to buy a top-shelf bottle of single malt whisky, and that was what I was to use it for. He himself is a vodka snob, but doesn’t care for brown liquor as I do. As a result I am able to sip a 20 yo Signatory bottling of Highland Park on occasions when I would otherwise sip something less.

Jacob January 8, 2007 at 1:46 pm

An ESL teacher once told me that her students had their own name for the O’Henry story: “The Stupid Couple”.

32rrfrtg October 8, 2007 at 2:11 am
joinoiwe November 30, 2007 at 3:26 am

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