Gifts – are they really stimulating and socially efficient?

In the previous blog, we provided an interesting viewpoint on gifts and the receiver’s psychology. Investment strategist B. Venkatesh’s observed that the person is pushed into a state of depression, if he or she does not get an exclusive gift. In fact, a friend of the author happened to pick up an argument with him over his observation that birthdays could get really depressing when one did not get what one badly wants.

His friend, the author notes, contends that cash remains the best form of gift because that way the recipient can buy whatever he or she wants. “You may spend Rs 3,000 to buy, say, a nice shirt or top for your friend, but what if the receiver does not fancy it? The gift might be worth less than the amount spent. There is, hence, a dead-weight loss — a gap between how much you spend on the gift and how much your friend considers it worth. A gift is, hence, economically inefficient.

“His argument is economically correct. But, socially, it is not. Why?” the author states, and then goes on to make an interesting observation on the social relevance of gifts by considering a practical example. He explains: “I call you for a party that I am hosting for recently remodeling my house. Borrowing from the North American custom, you think it would be appropriate to bring some wine for the party. But you are unsure whether I would like it or even drink alcoholic beverages.

“If you give cash, it would look as if you did not think hard enough about an appropriate gift. Besides, I may feel embarrassed to accept cash. But what if you give me wine that I actually do not like? I may at best gift it to someone who calls me for a party! But importantly, I will appreciate your gesture. Now, sometime later, suppose you plan to remodel your house. You call me, hoping to gain some knowledge from my recent experience with remodeling. What will my response be? The wine you gifted me would be a social lubricant. I will be willing to help.”

The writer concludes that gifts build a long-standing relationship, and if you gift something that is really liked by the receiver, it would ‘sit in his or her mantle for a long time’. Cash, he rightly argues, loses its identity because the person may use it up to buy some innate object the next day!

Sometimes, economically inefficient process can make social sense, and gifts certainly do! True, isn’t it?

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