Mieke Welvaert recently discussed gift giving, pointing out that it was significantly more complicated than the “just give cash” statement Matt Nolan made a few years back. For example a gift is an inherently different good to the same self-purchased product – I good is not just the set of physical properties that constitute it:
There are some things people like to receive but probably wouldn’t buy if you gave them the cash to do so. Flowers and chocolate come to mind for this category. I personally, much prefer to receive flowers than to buy them for myself. I understand that many people enjoy a box of chocolates free of guilt if they were given the chocolates rather than if they bought them for themselves.
Furthermore let us not forget the importance of signalling – gift giving can be a signal, which may have value, or may in itself be waste. When it comes to gifts the key point that comes out is that “efficiency is a really hard idea”.