Thoughtful gift-giving: How to avoid wasteful generosity

WE'VE BEEN giving gifts for as long as we can remember. Beyond a simple gesture, it's how we say thanks, celebrate milestones, or sometimes, win someone over.

- By Leo Jaymar Uy

In the case of acquaintances and colleagues, the gifts tend to be low stakes and more practical. Food packs, organizers, towels, and coin purses are some of the common (and safe) choices. In contrast, gifts exchanged among loved ones invite more variety. The assumption is that we know each other well enough to tailor presents to actual needs or preferences, raising emotional stakes.

Viewed through this lens, gifts function as a "social currency" of sorts. They act as proxies for understanding, signaling attention and emotional fluency in ways that words often can't.

And yet, how do we know if a gift truly lands?

Economist Joel Waldfogel attempted to quantify this dynamic in his 1993 paper "The Deadweight Loss of Christmas"* wherein he essentially argued that gift-giving often results in a "deadweight loss" (a loss of economic efficiency) because recipients typically value gifts less than what givers paid for them. In his paper, he surveyed students to estimate how much they would be willing to pay for gifts they received, and then compare these valuations to the actual prices paid by gift-givers, barring sentimental value.