How often have you wracked your brains over a gift to give a family member, friend or even a business associate? Wondered how much to spend on your gifts, and ended up spending a bomb because you just didn’t know what they would appreciate?

Also, are material gifts (jewellery, chocolates, clothes, etc) better than experiential gifts like concert tickets and spa coupons?
While common sense may suggest that people would appreciate expensive gifts more than relatively cheaper ones — in fact, we often try to balance our budgets with what we perceive as the right amount to spend on a gift — this is not the case.

A research study by Francis Flynn and Gabrielle Adams conducted a set of experiments to show that there is an asymmetry in how gift givers and gift receivers value the same gifts. They conducted experiments using engagement rings and birthday gifts, where some participants were assigned the role of gift-givers while others were recipients.

The study demonstrated that gift-givers were more inclined to think that recipients would appreciate a costlier gift more, but the responses from recipients did not show any correlation between the price of gifts and their perceived satisfaction. Thus, recipients seem to be happy just with the fact that they got a gift, while gift-givers wrongly believed the commonly held notion that expensive gifts are appreciated more.

Now we come to the second question. Are experiential gifts more appreciated than material ones? Recent research by Cindy Chan and Cassie Mogilner attempts to answer this question. In one experiment, they recruited student volunteers and randomly assigned them to pairs — again a gift-giver and a receiver. Half the gift-givers were further asked to choose a $15 material gift (shirt, poster or wine aerator) while the other half had to choose an experiential gift (barre class movie ticket) for their randomly assigned recipient partner. Before giving the gift, the researchers used a set of questions to measure the strength of friendship between each giver-receiver pair. These questions were also asked after the gift was given, and they found that friendship ties seemed to strengthen more for the receivers of experiential gifts.

According to the research cited above, inexpensive, experiential gifts like movie tickets or concert tickets may be more helpful in fostering and deepening a relationship than expensive material gifts, though people actually tend to gift more of the latter.

Gift-giving has fascinated economists, sociologists, psychologists and marketing researchers for a very long time, and perspectives on it are both fascinating and diverse. In economic terms, a gift is usually treated as an irrational behaviour, unless one expects a gift to yield reciprocal gifts or favours. However, psychologists and social scientists tend to be a little more nuanced about their views of gift giving, with psychological, religious and political functions.

Though these experiments were done in interpersonal settings, one may extrapolate these findings to other situations. For instance, startups — where interpersonal ties are very important due to informal working relationships — can use this wisdom while giving festive gifts to their employees.

Gift giving just became so much easier.

This column is intended to showcase interesting academic research in marketing. The technically oriented reader is encouraged to read the original research articles cited in the column.

Prithwiraj Mukherjee is Assistant Professor of Marketing, IIM Bangalore. Views are personal.

Lead visual: Angela Anthony Pereira

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