Bad news: When your partner, friend, or sister says “You really shouldn’t have” on opening that expensive gift – they mean it.
You could have shopped smarter and saved your money instead.
Academics at the Stanford Graduate School of Business1 showed that:
- Most gift givers assume an expensive present is better appreciated…
- …but in reality, gift receivers don’t appreciate expensive presents much more
It seems it really is the thought that counts.
Hey big spender!
Years ago, when I was the first of my siblings to get a higher income, I spent far too much money on Christmas presents.
Nothing that would turn the head of a Kardashian, mind.
Maybe a multi-piece Le Creuset
But now I’m back on the good – cheaper – stuff.
That might sound like I’m simply older and meaner.
But the issue wasn’t just that my more expensive presents weren’t really any better appreciated, or that I was miffed when I got a novelty t-shirt back. (Although, shamed, I’ll concede I was miffed).
The trouble was I bought bad presents just because they had more bling.
I was hiding my 20-something insecurities behind a price tag.
Worst of all, my sister told me she felt my gifts made all her presents seem cheap.
Which wasn’t exactly the gift I was trying to give!
Or even if it was (subconsciously, because, again, I was young and silly) it shouldn’t have been.
What matters when you give a present?
Happily we all grow up, and if we pay attention along the way we might even learn something.
Eventually I saw what really mattered to my family was whether we felt like we’d been thought of – and understood – when the gift was chosen.
One of my sisters also went through an ‘expensive presents with a new job’ phase. But now we’ve settled down to giving smaller, more personal presents, which we can all afford, and that we’re usually pretty happy to receive.
Not before time, too, after nephews and nieces entered the gift-buying equation. (Although honestly, I’d much rather invest for them than contribute more plastic tat to landfill.)
Anyway, my family’s experience mirrors what academic researchers long ago discovered. More money spent generally does not equal more happiness.
How convenient!
1: Expensive engagement rings aren’t worth it
In one study, Stanford researchers looked at engagement rings – a one-off big ticket item where you might expect extra expenditure to pay dividends.
But the academics found:
- Men consistently thought their rings were more appreciated by their fiancées the more expensive they were.
- Fiancées did not rate themselves as any more appreciative if the rings were more costly.
This doesn’t really surprise me.
While there’s a lot of marketing pressure on young romantics to prove their love at the jewelry store, the fact you’re asking someone to marry you is about as big a statement you can make.
2: More expensive birthday gifts aren’t more appreciated
In the second study, the Stanford researchers asked participants to think about a recent birthday gift:
Participants described a variety of gifts, including T-shirts, jewelry, wine, books, and home decor items.
Again, those who were givers expected that more expensive gifts would make the recipients feel significantly higher levels of appreciation.
In contrast, the recipients said they did not feel greater appreciation levels for gifts that had cost more.
Fact: It’s just not worth spending that extra chunk of cash. Researchers found givers would spend $100 on gifts that receivers would only pay $80 for. The excess $20 is a ‘deadweight loss’ in economic terms.
Now you know why those Christmas hampers are so overpriced.
If you see something someone would love that costs a little bit more and you can easily afford it, then by all means buy it.
Otherwise, this study is a green-light to cut 20% off your gift budget.
3. Straight-up more expensive gifts aren’t necessarily more appreciated
The research behind this article is a few years old now, as shown by the final strand of the Stanford study:
In the third study, participants were asked to think about giving or receiving either a CD or an iPod as a graduation present.
Once again, those who were randomly assigned to be ‘givers’ thought by giving the more expensive iPod their present would be appreciated more in contrast to the CD.
The ‘receivers’ rated no difference in appreciation levels, regardless of which item they were told to think about getting.
I doubt anyone would much appreciate getting a CD in 2020! Even an iPod is a bit passé in the iPhone era.
Also, this study was based on people imagining how they’d feel. Most of us would like to think we’re virtuous souls and not particularly materialistic. Reality may vary!
But if you are going to bring imagination into your giving, then one tip is for you to imagine the long-term future usage of the gift.
A 2016 study concluded that:
Given the widespread nature of giver-recipient mismatches, how can givers choose better gifts?
The obvious answer is that givers should choose gifts based on how valuable they will be to the recipient throughout his or her ownership of the gift, rather than how good a gift will seem when the recipient opens it.
Now for the obligatory TED lecture
The good news is that giving is good for you, however much you spend, as this video from TED explains:
This makes me think maybe I should have created one of those Donate to Monevator buttons that people have asked about for years…
I could have made some of you happy, and done ourselves a favour along the way!
Save money buying gifts
The message from academia is clear. Money
Some suggestions:
- Don’t feel guilty about setting a gift budget. You have to live within your means.
- Put more time into choosing a gift the recipient will really like.
- If you believe you haven’t got enough time to shop for something special and so instead you’re reaching for a thermonuclear price tag to get you off the hook, think about how long it’d take you to earn the money you’re about to spend. This process you should ‘buy’ you several hours at least, and a cheaper and more appreciated present.
- Try to make something happen – an experience or a one-off event – if you really want your gift to be remembered.
Finally, if any of my friends or family are reading and thinking “poppycock!”, then please know you’re welcome to stick to buying more expensive gifts – and that I’ve been lusting over this copper-finished Hotel Chocolat Velvetiser hot chocolate machine all year!
Happy giving
- Research findings from: Money Can’t Buy Love: Asymmetric Beliefs about Gift Price and Feelings of Appreciation – Francis J. Flynn and Gabrielle S. Adams, Journal of Experimental Social Psychology. [↩]
Comments on this entry are closed.
An interesting read and a departure from the usual data heavy topics. I enjoy the occasional Monevator article about ‘life in general’, a few more would not go amiss 🙂
I’ll certainly confess to displaying a few of the negative traits in this article (‘status buying’, expensive engagement ring etc.), but I’m now in a happy place, with proper budgets for gifts and effort (finding the right thing) replacing quantity (buying everything).
tell that to the wife – very, very dangerous game you’re playing
I have already come under heavy fire over the non-purchase of a particularly expensive bottle of chanel..
Which reminds me, I still have one VERY important present to buy, and not much time.
I was thinking thermonuclear, though your comment on considering “how long it’d take you to earn the money you’d spend on that costly quick-fix gift” is genius.
As a passive investor I too thoroughly enjoy the “life” articles too.
Giving the wife something useful like a dishcloth or iron is a high, high risk strategy. Way beyond the risk tolerance of the average passive investor!
Gifts are often more a signal of commitment than making someone happy though. It is the very asymmetry of their value that can make them so important.
For example, in the olden times royal families would often marry off their ugly younger sisters to cement relationships between other royal families. To the receiving family she is probably not worth very much as she is unlikely to add much to the labour pool and has no assets to speak off. Basically she is a liability. But to the donor family she is someone they love and cherish, and will lose when she moves to the new realm.
A similar thing applies with engagement rings. An expensive ring signals commitment, the higher the cost to the giver the more “valued” it is to the receiver. In the extreme you might might give your grandmother’s engagement ring to your bride-to-be. In that case it might have enormous [sentimental] value to you, but to her it has a far lower value beyond the sacrifice you have made as she may well have never even met this much loved and now deceased woman.
@Dave,
I love the idea of trying to justify a dishcloth as a present for the wife.
…”But The Investor said you wouldn’t appreciate an expensive present any more than you would a cheaper more thoughtful one, and you have been saying for some time now we need some new ones”
And you’re right, it’s far above my risk tolerance!
@Investor
Would I be correct to guess that you are still single?
Mrs LCIL & I stopped giving each other xmas presents a couple of years back. We still do birthdays but keep the amount spent relatively small.
For our extended families we do secret santa, which we all seem to have got behind well the last few years. The nieces & nephews still get a gift from each aunt/uncle though so the tree always looks full of gifts.
Over the last 12 yrs Mrs LCIL has lost both her engagement AND wedding rings, so we’re both kind of glad we bought inexpensively when we did buy them. That whole “1 months salary” thing must have been dreamt up by a jewelers cartel lol. She now wears an old silver ring of mine that i bought when travelling as a younger 20 something in India. Cost me about £1.75 if i recall correctly!
Happy Xmas & New Year to the Monevator team. Our life is enriched for your weekly blog posts! Keep up the great work!
@LCIL
This is my first year of ‘sibling secret Santa’. With 5 of us + 4 partners, it has saved everyone c. £175 in the space of one year. It has been such a money saver that my Dad has joked that he wants in next year!
Thank you very much. Enjoy your Christmas. It helps tremendously if you share an experience particularly if you are lonely.
Secret Santa is such a good idea, saves money and reduces the amount of cack you have to sell on eBay in the new year! 😉
We agreed to not do presents this year and then the Mrs goes and buys me one, should I get her one or not? She says I don’t have to but I think it’s a bit mean not to!
@firestarter That is whats known in the industry as a ‘test’. It is vital that you must never, ever fail a ‘test’. A bit like an MOT but many orders of magnitude more serious.
You’re doing something wrong if all your gifts are plastic tat.
@FIREstarter
Seconding what Rhino said, and possibly thirding as well 😉
I’ve never understood the need to buy expensive engagement rings etc. But then I’ve never seen my husband as a walking wallet – I want a companion and partner in life. I don’t have an engagement ring at all..
Presents, I do like, but I prefer lots of small things (books, chocolate, even socks 😉 ) Big ticket items I’d rather choose myself to be honest, you don’t want to waste a lot of money on something that isn’t what you want!
But, gents, if I have to tell you that an ironing board cover is not a gift, something is wrong ;-). And firestarter, nothing is not a gift either. Make her some nice chocolates, make a calendar or montage of photos of shared experiences-time and not money will be appreciated…
Happy Christmas everyone!
Spending a lot of money on presents is easier than putting a lot of thought into what you give, which is why some people like to pretend that expensive gifts are what their partners expect. Personally I’m with Vanguardfan, something meaningful rather than expensive is appreciated much more.
The Ted talk is interesting. The natural conclusion is that social support networks would work better if they were funded by charity rather than taxation as this would produce the maximum amount of happiness. As this model has never worked in the past there must be something missing somewhere – probably personal contact with those we are giving to so that it becomes a real interaction and not just a transaction – just like giving a gift.
Cheers for the advice all. I’ve done calendars in years past and they’ve always gone down well… Just hope I haven’t missed the deadline now!
Merry Xmas to you all and especially Monevator, thanks for all that you do here.
the(chestnuts roasting on an open)FIREstarter
🙂
Cheers for the comments all!
@Luke — Thanks, and yes I think we did push the nerdy dial towards maximum setting here on Monevator in the second half of 2014. The trouble is both me and The Accumulator are pretty obsessed with investing, so we’re always inclined to have Just One More Thing to say on that subject…
That said he is much more well adjusted and better integrated into a more everyday reality than I am, so I’ll keep trying to hound him for more generalist articles. 🙂
Merry Christmas all!
I’m a bit late to the comments party… but enjoyed this article about the importance of ‘experiences’ over ‘things’…
http://www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/?single_page=true
Interesting article. I just wanted to point out a couple of minor points I noticed after reading the paper (Flynn and Adams, 2009) referenced:
1) The 20% “deadweight loss” is actually from J. Waldfogel, The deadweight loss of Christmas American Economic Review, 83 (1993) and not from the work by Flynn and Adams.
2) The 20% “deadweight loss” is reasonably constant across gift value, so if you reduce your gift from say $100 to $80, the recipient is likely to value it at 80% of $80 which is $64 and not $80.
What may be interesting is seeing if spending more time choosing a gift reduced the deadweight loss percentage (neither research paper looked at this). If it did you could work out an optimal amount of time you should spend choosing a gift based on the value you were planning on spending and how much you value your time.
The Monevator Team and all Readers,
Merry Christmas and a Prosperous New Year to all.
[quote]If you believe you haven’t got enough time to shop for something special and so instead you’re reaching for a thermonuclear price tag to get you off the hook, think about how long it’d take you to earn the money you’re about to spend. This process you should ‘buy’ you several hours at least, and a cheaper and more appreciated present.[/quote]
Genius!
@LCIL
“…That whole “1 months salary” thing must have been dreamt up by a jewelers cartel lol. …”
(Apparently) it was De Beers: https://www.bbc.co.uk/news/magazine-27371208
@MarkR…. I KNEW IT!! lol.
My comment back there from 2014 can be refreshed with the positive news that to-date Mrs LCIL hasn’t thus far lost the £1.75 ring :-). We have actively chosen not to buy another expensive ring.
Have I really been reading Monevator for 6 years now…. really, where does the time go!
Santa Claus prefers rich kids, he also prefers certain religions over others, and was actually the first to receive the Pfizer-Biontech vaccine
I ask for car oil, windscreen wipers, car mats, and rechargeable AA batteries.
Also Xmas is a time when we choose to eat food we otherwise never would – turkey? Brussels sprouts? Xmas pudding? Minced pies? Christingle? Yuk
At least Rudolph will be able to see in the dark with all the carrots he’s eating, I’d hate to muck him out when it all goes through
Can we gift a unit in an index fund?
@matthew you can to me with pleasure lol
For many years Mrs GT and I bought each other practical gifts. I bought her a 5-ton trolley jack for her car one year. It was difficult to wrap as I recall. These days we buy each other experiences – mine to her is often Christmas away at a nice hotel.
I not at all sure about this idea of “expensive engagement rings not being worth it”. I’ve been told that “you should have bought another carat”, that “you were being cheap”. See, you have to weigh up the cost vs. the earache and loss of brownie points. After over a decade of comments, I’d happily go back in time and pay up. Not everything is about money. Avoiding aggro is priceless.
@zx – Depends whether the agro is avoidable in the long term or if you’re just kicking a can down the road – if she can’t appreciate your reasons for being rights the time then it may be a problem. I don’t seek conflict but also don’t avoid it. Could also indicate an insecurity if people feel the need to impress.
Actually saw a program once where people of both sex found the other sex more attractive if they gave the impression of being more careful with spending – they were seen as more dependable, someone you can trust your lifetime and your heart with, whereas if someone was blinged up to the nines they were assumed to be fake, shallow, had many exes, etc. So I take pride in displaying my stinginess, people who know me at work don’t think that I’m stingy because I have no money, they realise that I do have money BECAUSE I’m stingy.
Also unless she’s going to take it down the jewelers for a valuation you could just pass her off with a fake. What would she do with many carrot gold and perfect diamond – make some kind of space laser? Or does aged just want the impression that buying it for her cost you many hours of work? – in which case I might suggest lowballing your earnings to control expectations
For any married man this blog is tantamount to a suicide note!
Even if people use CDs less at home don’t they still use them in the car?
I guess you didn’t mean to have Nigel Farage as one of your backers of this website
https://imgur.com/7Qs7bzk
@Simon T — Yeah, it’s always pretty annoying. They’re network ads so we can’t control them beyond banning the overtly objectionable / illegal stuff, as opposed to the tinpot fantasist delusional Brexiteer nonsense. 😐
@BeardyBillionaireBloke
They use USB sticks now to load the songs onto the cars hard drive
Even the grumpy bloke in the pub in his 70s does it
I am bitterly disappointed that I have watched and inquired and saw the blood sweat and tears mr accumulator put into that financial book.I have pre ordered my fully autographed copy at least 2+ years go and regularly inquire where is it ,when will it be finally ready.l do hope you will not disappoint me much longer and make an old lady very happy as I am sure such a book would help many people in our unfortunate present day predictament,and be a success for both of you.Here is hoping!mr accumulators mum