Why do some people prefer gifts to money?
One of the most enigmatic paradoxes in psychology is the existence of people who prefer gifts to money.
For example, in a 2023 YouGov poll, 29% of Brits preferred to receive money, 7% preferred gift cards, 15% chose the ‘don’t know’ option and the other 51% preferred some kind of gift. Across other countries, the proportion of respondents who preferred to receive cash or money varied from 71% in Indonesia to just 15% in Denmark.
In every country surveyed the proportion of gift-preferrers was well above Lizardman’s constant.
People who prefer to give money are even less common than people who prefer to receive money.
I still can’t come up with a convincing explanation for this utterly bizarre phenomenon, but I’d like to share a few failed attempts so far.
Attempt 1
Under some circumstances, some people have an irrational tendency to value variable rewards more highly than predictable rewards. Gifts are often wrapped, with social customs that they must not be opened until a certain date. Doing so prolongs the period when the gift is unknown but highly salient.
So why can’t Bob give Alice cash, but randomise the amount of cash that he gives? If Bob is on equally good terms with both Alice and Charlie, but he gives Alice £20 and Charlie 50p then accusations of favouritism are inevitable. Even if Bob claims that he chose how much cash to give via a fair, completely randomised process, it’s hard for him to prove that he is telling the truth. Whereas if Bob spends £10 on a gift for each of them and Alice loves her new slippers whereas Charlie’s slippers don’t fit, it’s usually clear to everyone that Bob accidentally misjudged Charlie’s shoe size and wasn’t showing deliberate favouritism.
The issue with this explanation is that bias towards variable rewards is most likely to occur when there is a very small change of a very big reward. Whereas the value of a gift to Alice is bounded above by the amount that Bob spent on it.
Attempt 2
It takes more time and effort to purchase and wrap a gift than to visit an ATM. Perhaps Alice likes knowing that Bob was willing to sacrifice time and effort into her.
So why doesn’t Bob give Alice cash and a handmade card instead?
Attempt 3
By choosing an appropriate gift for Alice, Bob signals how much he knows about her preferences. However he could signal his knowledge about her preferences more efficiently by telling her what he knows about her preferences.
Attempt 4
Consider the following scenario:
Alice has a high temporal discount rate. If her approval reward system did not exist then she would much rather have £30 now than have £3 in a month’s time. However people who spend all their money at once instead of saving are looked down upon.
If Bob gives Alice £30 for Christmas then she will probably save the money and only spend it in a month’s time because she gets approval reward from saving the money. So effectively the £30 is worth less than £3 to her.
Alice enjoys drinking wine. However she will not buy herself expensive wine because she does not want to be seen as being irresponsible with money. So when Bob buys her a £30 bottle of wine she is delighted that she gets a chance to drink quality wine without losing approval reward.
Suppose Bob were to instead give her five £6 bottles of wine. Then she wouldn’t want to drink all five bottles in one go and risk the negative approval reward from being seen as an alcoholic. So for four of those five bottles the time when she ends up actually consuming the wine is so far into the future that she values them very little.
So Alice would rather be given the £30 wine which tastes slightly better than the £6 wine.
There a couple of problems with this explanation.
Firstly, most people have an approximately hyperbolic discount function. That is to say, a reward received D days in the future will be valued approximately times as much as it would be if it were received now, for some constant . This discount function flattens out as . That is to say converges to as .
So Alice may prefer recieving a gift now to recieving money now, but there is no reason why she should prefer recieving a gift at some distant future date to recieving money at some distant future date and I would not expect her to report a preference for gifts on an online survey.
Bob wants immediate approval reward from Alice’s appreciating the gift, but he also cares to some extent about what Alice’s future self will think of him. So he is more likely to prefer to give cash than Alice’s current self and more likely to prefer to give gifts than Alice’s future self.
Attempt 5
Alice knows that £30 is more useful than a £30 bottle of wine, but her understanding of the abstract concept of money is mainly in her cortex whereas her reward system is mainly controlled by specialised circuits in her brain stem. So it makes sense that her reward system would react more strongly to a bottle of wine than to an abstract entity that can be exchanged for wine.
On the other hand, Alice also prefers gift cards to money. So why would her reward system learn to react more strongly to a £30 gift card than to £30 in bank notes?
I value my leasure time >> my money (at least within typical gift cost amounts). The value of a gift chosen by someone who knows my preferences well enough is primarily the value of time I did not have to spend on finding something matching my preferences well enough >> the monetary value of the gift.
P.S. Edited to add: as an additional bonus, people would often give the type of gifts where their expertise exceeds mine, so they end up giving me something better than I would even know to get myself (e.g. they have a better sense of style and can gift me something that would look well on me).
It’s about demonstrating both that you know the person well enough to pick something they’ll like, and, probably more importantly, that you’re willing to put in the time and thought to select it and deliver it.
By the way, that effort means the recipient has to be in a relatively small hand-picked circle, no matter how rich you are. A gift picked by your personal assistant is not an acceptable substitute if the relationship is one of genuine intimacy and affection (as opposed to one of the many quasi-business relationships where you use what may look to the naive like insincere signals of intimacy and/or affection).
Also, a lot of people legitimately like to be surprised. If you’re really lucky, you find something that the person will like that they didn’t even know existed. But that’s very much extra credit.
I strongly suspect that cash and a handmade card would actually work OK for most people, especially if the card had something personal about it. On the other hand, I think a lot of people would find it pretty creepy if you started explicitly enumerating all the things you knew about them. That removes potentially useful ambiguity and is likely to lead you into Not Done territory.
This all makes a lot more sense if you remember that the gift is unlikely to be all that valuable. It’s probably not going to be something the recipient couldn’t afford anyway, so getting it wrong isn’t that big a deal; at least you still demonstrated the effort. If a single gift is big enough to really affect the finances or lifestyle of either the giver or the recipient, it’s likely to actually be negotiated ahead of time. Which is a process with its own etiquette… and where different people have differing expectations about what that etiquette is. For some people, said etiquette may include not overtly mentioning that you’re negotiating.
In fact, I wouldn’t be surprised to find that your polls correlated with all of that. Perhaps Indonesians give a lot of relatively big gifts that are supposed to actually loom large (“Here’s a new washing machine”), and/or a lot of gifts to business associates or other people with whom they have “formal” relationships, whereas Danes give a lot of small tokens of affection (“Here’s a box of cookies I thought you’d like”), and mostly to people they actually interact with on a regular basis.
It does tend to break down when people get comfortable enough, and/or have their lifestyles fine-tuned enough, that storing and/or maintaining a gift starts to be a burden. Older people, especially, may sincerely prefer that you not give them anything, or at least not anything they won’t use up.
I have plenty of money. If there’s something I know I want that’s easy to buy for a reasonable amount of money, I’ve already bought it. If someone gives me a gift that I wouldn’t have thought to buy for myself (but which I do in fact want once I’m aware of it) or would be hard for me to buy myself (e.g. because choosing the right version of that product requires research that I lack the knowledge for) or where I have some mental block that prevents me from admitting to myself that I want it, that’s significantly more valuable to me than cash would have been.
When I was a student and had very little money, I preferred cash.
I’m very frugal, if you give me money it just goes into savings. I prefer getting gifts because it’s usually stuff I wouldn’t buy for myself.
Re #3: The easiest demonstration is to do it. How well do you think it would go over if you said “I know you like cooperative board/card games. I found The Crew for sale at Central Gaming for $19.99, and you might enjoy playing it. Here’s their address and a $20 bill.” vs. just buying it and giving to them?
Kind of against #4: A gift includes permission to have and use it. This goes double when the recipient is a child, spouse, or anyone else the gift-giver has a stake in. “Why do you think those binoculars are the best way to spend $1000?” Not my choice, it was a gift! “Why do you birdwatch during our hikes?” Because I was gifted the binoculars!
The only knowledge “You might enjoy playing it” is displaying is that you know they like board games, which is not enough to be meaningful. In order to qualify as knowing the person it needs to be much more specific. And indeed, I value “you should read this book in particular because of x, y, z” much more than the median book someone might buy me.