the sociological defense of christmas presents

Fabio

The economic argument against non-cash presents goes something like this: Say I buy Teppo a present that costs $100 but the present is only worth $80 to my co-blogger. It would be better if I had just given Teppo $100 in cash because he would have gotten $20 more in value. Studies by researchers such as marketing professors Davy Lerouge and Luk Warlop have shown that the estimated value of most presents is less than what was paid for them. Therefore, most presents are inefficient.

Here’s my sociological defense of presents: Let’s say that the present’s value = (immediate use value to recipient) +  (value of the memory of the present).  That is, the present’s value for the recipient is not just the cash value, it’s also how often it helps you remember your relationship to the giver. Teppo might think it is very funny that I gave him a velvet Elvis that cost me $100, which he values at $80. A life time of laughing at my poor taste is probably worth a lot more than $20.

My theory explains a lot about presents. A lot of presents are not very useful, but they are memorable. Those china plates that mom gave you that you use only once a year? Designed to be flashy and remind you of mom, it stengthens the bond even if you don’t like them.

Alternate hypothesis: Presents are not valuable to the recipient – they are valuable to the giver! Why? Gifts create a sense of obligation and good will toward the giver. The value comes from the fact that the recipient owes you something in the future. You can even deduce novel predictions from this theory. For example, the best presents go to the most trust worthy friends and relatives because the gift is a downpayment for a future favor. It also explains the gifts given from bosses to employees, instead of bosses just increasing the yearly salary.