Gift Giving Irrationality

Duke economist Dan Ariely argues that the Western notion of gift giving is irrational.

Duke economist Dan Ariely argues that the Western notion of gift giving is irrational.

One of the best answers I’ve gotten so far is this: “A good gift is something that someone really wants, but feels guilty buying it for themselves.”  What is interesting about this answer is that the ideal gift from this perspective is not about getting the person something that they can’t afford, or something that they have no idea that they want – it is all about alleviating guilt connected with the purchase of a highly desirable (yet guilt invoking) item.

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Imagine that you are walking by a storefront and you notice a beautiful coat that is just the right cut and color.  You walk in to check it out, and up close it is even more beautiful.  But then, you look at the price tag and you discover that it is about twice as expensive as you originally guessed, and after 30 seconds of painful deliberation you decide that you can’t possibly justify paying so much for a coat – and you go on your way.  When you get home, you find out that your significant other has purchased that same exact coat for you … from your joint checking account.  Now, ask yourself how you would feel about this. Would you say a) “Honey, this is very nice of you, but I have weighted the costs and benefits earlier and decided that this coat is not worth the money — so please take it back immediately” or b) “Thank you so much, I love it, and I love you.”  I suspect that the answer is b.  Why?  Because by getting you the expensive coat, your significant other got you what you wanted without making you contemplate the guilt associated with the purchase.

He gives other examples and concludes “the best gifts circumvent guilt in two key ways: by eliminating the guilt that accompanies extravagant purchases, and by reducing the guilt that comes from coupling payment with consumption.”   Which strikes me as right.

The issue with the joint checking account isn’t truly economic but rather that one doesn’t wish to be seen as selfish when spending the family money.  When one’s spouse makes the decision in your favor, that’s eliminated.   In the example above, the coat was affordable but extravagant.  I’m always more willing to be extravagant in spending for my wife or kid than for myself, so, yes, the gift would be welcome.

On the other hand, I wouldn’t mind trading in the five-year-old 350Z that I bought used three years ago for a new M6 convertible or 911 Cabriolet. Or, hell, a Murcielago LP 640. But if one of those was in my driveway on Christmas morning, I’d send it back.

FILED UNDER: Economics and Business, Quick Takes
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. John Burgess says:

    I’ve got some problems with that extravagant purchase coming from the joint account. Oughtn’t it be coming from the spouse’s individual account, if it’s to be regarded as a gift? At least in my household, joint accounts were for things that benefited the entire household, not just part of it. The coat in question would only be half a gift if the recipient were paying half the cost.
     
    Arguably, the ‘joy of giving’ a coat could be considered a benefit to place against the ‘joy of receiving’, but that, IMO, is a thin argument. Buying an up-graded stove top, when both parties cook, would be a better argument.
     
    The overall analysis, of a good gift’s being something that eludes the guilt barrier, is good, though.

  2. James Joyner says:

    @John
    My wife and I really don’t have personal accounts. Our money is effectively all pooled.
    While I like clothing more than the average guy, even in my income bracket, I’m not going to go out and spend $4000 for a jacket.  Or, hell, $1000.   At the same time, we’re flush enough that the only thing preventing us from upgrading the cooktop is the time it takes to do product research, coordinate with the contractors, pick out new countertops, and so forth.
    The trade-offs are at the upper end.  My wife drives a mid-range car costwise but she “needs” a brand new one each time because she really, really values the various technological doo-dads.  (Navigation, backup camera, and such).   Unless I get really, really rich, I’ll likely never buy a new car again.   Absent an accident or such, I’ll likely keep my five-year-old sports car for several more years, eventually trading it in on another late model convertible of some sort.   I’d consider trading in sooner if it were just me but I’ve got private school for the two-year-old to pay for soon, and that takes priority.

  3. John Burgess says:

    Just different economic systems, I guess. I’d never expect to have access to my wife’s money for my personal purchases. Hers is hers; mine is mine; the joint account is where money is to be pooled for jointly-acquired expenses.