Economic Value Of Gift Giving

Generally, the giving of gifts is a way of conferring material benefit on a recipient (Sherry, 1983). In terms of intricacy, the economical value of a gift could be viewed as the most basic level of gift value. Typically, gifting is conceived as an exchange that is social and nonexploitive, thus not creating an expectation of an equivalent return (Sherry, 1983). Nonetheless, on a purely economical level, the gift giving process can be categorized as an economic exchange between two parties in which the value of the gift is determined by the market forces (Larsen & Watson, 2001). By categorizing gift giving purely as an economical exchange, little to no room is left for agents to gift out of altruism or goodwill – the giver rather expects to

The functional value refers to the perceived utility acquired from an object’s capacity for functional, utilitarian, or physical performance (Sheth, Newman & Gross, 1991). The functional value is usually the predominant driver of consumer choice in a traditional transaction (Sheth et al., 1991). Nonetheless, this functionality is rarely heeded throughout a generic gifting process. Think of a husband who purchases a badly needed new set of cooking pots for his wife’s birthday – despite the clear functional value of the pots, the husband and his gift would be viewed by most others as insensitive, unromantic, maybe even unappreciative of his wife. An important aspect of gift giving is its symbolic representation of the particular relationship in which it occurs – the symbolic statement made by gifting a set of pots would be undesirable for a romantic relationship and could lead to the recipient feeling unappreciated or perhaps even put down by the giver (Larsen & Watson, 2001). This highlights the fact that a gift is rarely chosen purely due to its functional value. While functional utility is often considered, it is, in the context of gift exchange, only a minor aspect of gift value (Larsen & Watson,

Economic explanations even seem superficial and tend to go against the spirit of gift giving (Camerer, 1988). Individuals seem to gift not solely due to economical reasons – they expect more than a transfer of pure economic means (Robben & Verhallen, 1994). When people rely on economic explanations to justify their gift giving behavior, the gifting itself becomes inefficient and, to some extent, puzzling. Regarding this inefficiency, Camerer (1988: 181) notes, “In the simplest theory of consumer choice, there is no place for the sort of consumer choice, there is no place for the sort of inefficient gift giving we routinely observe between people; if consumers know their owns tastes and markets function smoothly, givers should give cash (if anything) rather than try to guess the desires of receivers.” This statement is supported by recent research by Gino and Flynn (2011), who argue that gift receivers would be happier if givers gave them exactly what they requested, instead of trying to be considerate by buying gifts that were not explicitly