Economics of Gift-Giving

Published by patrick honner on

This is an interesting article about some of the psycho-economical factors involved in gift-giving.

Starting with the premise “the best gift is something that someone wants, but would feel guilty buying themselves“, the author explores some interesting ideas, including the pain of paying.

Studies suggest that when consumption is directly connected to payment, the result is a decreased feeling of satisfaction in the mind of the consumer.  Regardless of the satisfaction one might feel consuming a product or service, the act of paying reduces that satisfaction.  Marketers go to great lengths to reduce this pain of paying; the success of credit cards is one example of this principle at work.

The author concludes that gift cards really are the best kinds of gifts:  not only can a person get whatever they want,  the card itself frees the user of the pain of paying, which itself may be the best gift of all.

This reminds me a bit of the curious psycho-economic results associated with pricing models I read about earlier this year.

Categories: Uncategorized

patrick honner

Math teacher in Brooklyn, New York


Tao Wang (@MathLaoshi) · December 19, 2011 at 3:45 pm

Funny. I think I experience this pain of paying even when I do receive a gift certificate.

MrHonner · December 19, 2011 at 5:20 pm

I do, as well. Maybe as quantitative people we have some resistance to this psycho-mathematical phenomenon.

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