Stephen Dubner (of Freakonomics fame) provides a rather compelling reason why consumers might not want to be so quick in buying gift cards for that hard-to-shop-for person:
[F]or the merchant...the gift card is a godsend. Just think of it: In the weeks leading up to Christmas, millions of people visit your store or Web site and hand you billions of dollars in exchange for nothing more than a plastic I.O.U. that may never even be redeemed. Best Buy, for instance, earned $16 million last year in gift-card “breakage,” which is the industry’s term for card value that was bought but never redeemed. Then there’s what retailers call “upspending”: most customers who do use their gift cards spend some of their own money to buy merchandise that is more expensive than the value of the card.
For the giver, meanwhile, a gift card could hardly be easier. But most economists would argue that if a gift card is so transparently good for the giver, it is necessarily bad for the recipient: the fact that it can be bought so easily signals to the recipient that the giver didn’t put much effort into the gift.
In the end, the value of any gift is overwhelmingly dependent on the nature of the relationship between giver and recipient. The economist Alex Tabarrok, writing recently on the Marginal Revolution blog, put an even finer point on this fact, noting that each of us has many “selves,” including a “wild self,” and that “we want the wild self in someone else to be wild about us.” His advice? “If you want to please the economist in me, send me cash. If you want to please my wild self (you know who you are!), use your imagination.”
So next year, if you need a gift for a strict rationalist, consider cash. If you want to appeal to someone’s wild self, you’ll have to use your imagination. And if you’re hoping to send a little something extra to the shareholders of Best Buy or the Gap or Tiffany, consider a gift card.
Vicky and I registered this past spring at Crate & Barrel and Bed Bath & Beyond primarily because that's just what engaged couples do...and not so much because we really needed the things we registered for. If we had strictly operated on the later premise, our registry would have actually been quite small. The kinds of things (truth be told) that we were really interested in were things like a modest couch/recliner set....and who is going to give that for a wedding gift!
Had we been moving into a 3 bedroom, 1600 sq. feet home, together then there likely would have been all sorts of things we would have needed to 'fill in' the place. But we were going in the opposite direction -- from my studio and her one bedroom apartment to just her apartment!! Needless to say, we quickly realized that wasn't going to work....so we moved into a more spacious 2 bedroom place a few blocks away. Still, in typical California fashion, it's hardly booming with space.
So what happened? We ended up with a lot of nice gifts that we simply didn't have room for! What do you do then? Well, one option would be to store it all in the mother-in-law's house 25 miles away. I actually know someone who married fairly recently -- I won't say who -- who privately confessed to doing this very thing. But, being the 'cruel' people that we are, Vicky and I decided to take the insensitive route -- "Let just return the stuff we don't really need...and exchange it for cold hard cash!"
Which brings us back to the point being made by Dubner. I've admittedly fallen into the 'gift card' myth many times in the past, but the evidence doesn't lie. There's a reason Best Buy parades gift cards before you on virtually every isle -- they know many of those $50 gifts are really just gifts to Best Buy, not the consumer who receives to card.
The next time you think about giving a 'gift card' for a wedding or Christmas gift, why not just give them cold hard cash instead? It's certainly not less-thoughtful, and it actually provides more immediate-yet-flexible liquidity. I doubt too many Koreans have read Freakonomics, and I'm not sure I fully understand the complexity of motives behind Asian-wedding gift giving....but they clearly understand that most of us low and middle income people will always benefit (and enjoy!) the most from monetary gifts.
So Bah humbug to gift cards, I say!
[And if you are reading this blog and you were one of the people who gave us a non-monetary gift for our wedding, we truly appreciate your decision to give whatever you gave! Rather, this commentary really has to do with my own public 'repenting' of all the gift cards I've given people as gifts in the past!]
Postscript: Dubner has a great piece released yesterday on charity giving. His blurb about tithing didn't strike me as particularly revolutionary, but it did occur to me how manditory tithing cuts against the whole theonomic rationale (i.e. law) behind tithing. Anyone interested in a soft-pedaled form of 'Christianized Socialism'? Of course, I learned from a good friend a couple years ago that there are actually Reformed church sessions that think the entire congregation should give all of their goods/possessions to the session, only to have the sessions distribute it as needed. What a grand idea: Reformed charity in the form of Christian communism! Seriously....who can make this stuff up?