I value my leasure time >> my money (at least within typical gift cost amounts). The value of a gift chosen by someone who knows my preferences well enough is primarily the value of time I did not have to spend on finding something matching my preferences well enough >> the monetary value of the gift.
One of the most enigmatic paradoxes in psychology is the existence of people who prefer gifts to money.
For example, in a 2023 YouGov poll, 29% of Brits preferred to receive money, 7% preferred gift cards, 15% chose the 'don't know' option and the other 51% preferred some kind of gift. Across other countries, the proportion of respondents who preferred to receive cash or money varied from 71% in Indonesia to just 15% in Denmark.
In every country surveyed the proportion of gift-preferrers was well above Lizardman's constant.
People who prefer to give money are even less common than people who prefer to receive money.
I still can't come up with a convincing explanation for this utterly bizarre phenomenon, but I'd like to share a few failed attempts so far.
Attempt 1
Under some circumstances, some people have an irrational tendency to value variable rewards more highly than predictable rewards. Gifts are often wrapped, with social customs that they must not be opened until a certain date. Doing so prolongs the period when the gift is unknown but highly salient.
So why can't Bob give Alice cash, but randomise the amount of cash that he gives? If Bob is on equally good terms with both Alice and Charlie, but he gives Alice £20 and Charlie 50p then accusations of favouritism are inevitable. Even if Bob claims that he chose how much cash to give via a fair, completely randomised process, it's hard for him to prove that he is telling the truth. Whereas if Bob spends £10 on a gift for each of them and Alice loves her new slippers whereas Charlie's slippers don't fit, it's usually clear to everyone that Bob accidentally misjudged Charlie's shoe size and wasn't showing deliberate favouritism.
The issue with this explanation is that bias towards variable rewards is most likely to occur when there is a very small change of a very big reward. Whereas the value of a gift to Alice is bounded above by the amount that Bob spent on it.
Attempt 2
It takes more time and effort to purchase and wrap a gift than to visit an ATM. Perhaps Alice likes knowing that Bob was willing to sacrifice time and effort into her.
So why doesn't Bob give Alice cash and a handmade card instead?
Attempt 3
By choosing an appropriate gift for Alice, Bob signals how much he knows about her preferences. However he could signal his knowledge about her preferences more efficiently by telling her what he knows about her preferences.
Attempt 4
Consider the following scenario:
Alice has a high temporal discount rate. If her approval reward system did not exist then she would much rather have £30 now than have £3 in a month's time. However people who spend all their money at once instead of saving are looked down upon.
If Bob gives Alice £30 for Christmas then she will probably save the money and only spend it in a month's time because she gets approval reward from saving the money. So effectively the £30 is worth less than £3 to her.
Alice enjoys drinking wine. However she will not buy herself expensive wine because she does not want to be seen as being irresponsible with money. So when Bob buys her a £30 bottle of wine she is delighted that she gets a chance to drink quality wine without losing approval reward.
Suppose Bob were to instead give her five £6 bottles of wine. Then she wouldn't want to drink all five bottles in one go and risk the negative approval reward from being seen as an alcoholic. So for four of those five bottles the time when she ends up actually consuming the wine is so far into the future that she values them very little.
So Alice would rather be given the £30 wine which tastes slightly better than the £6 wine.
There a couple of problems with this explanation.
Firstly, most people have an approximately hyperbolic discount function. That is to say, a reward received D days in the future will be valued approximately times as much as it would be if it were received now, for some constant . This discount function flattens out as . That is to say converges to as .
So Alice may prefer recieving a gift now to recieving money now, but there is no reason why she should prefer recieving a gift at some distant future date to recieving money at some distant future date and I would not expect her to report a preference for gifts on an online survey.
Bob wants immediate approval reward from Alice's appreciating the gift, but he also cares to some extent about what Alice's future self will think of him. So he is more likely to prefer to give cash than Alice's current self and more likely to prefer to give gifts than Alice's future self.
Attempt 5
Alice knows that £30 is more useful than a £30 bottle of wine, but her understanding of the abstract concept of money is mainly in her cortex whereas her reward system is mainly controlled by specialised circuits in her brain stem. So it makes sense that her reward system would react more strongly to a bottle of wine than to an abstract entity that can be exchanged for wine.
On the other hand, Alice also prefers gift cards to money. So why would her reward system learn to react more strongly to a £30 gift card than to £30 in bank notes?