The Psychology of Holiday Gift-Giving

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In the Christmas classic Home Alone, eight-year-old Kevin McCallister contends with burglars Harry and Marv. Similarly, we channel our inner Kevin as we contend with the force of gift-giving every Christmas season.

More than half of the American population—over 164 million shoppers—admit Christmas shopping to be the most stressful part of their year. They also confess that stress levels for gift-shopping surpass stress felt when spending time with in-laws during the holidays. 

To find out why gift-giving is emotionally and mentally taxing, let’s dive deep into the intricacies of our social psychology and ego.

Social Psychology and Gift-Giving: Intention Rules Over Cash

From an economic standpoint, cash holds the highest objective value because we can use it to buy anything our merry heart desires. Having a $50 Groupon is sweet, but we’re limited to spend it at a particular place, product, or service. In the kingdom of gift-giving, if cash is king, why doesn’t it rule?

Historically, we have used gifts to symbolize feelings of gratitude, appreciation, love, and loyalty. The sentimental value in gift-gifting supersedes the monetary value it took to get the gift. Despite the change in reciprocal gift-giving customs in many cultures, there’s one secret ingredient that remains in gift-giving today: intention.

As social creatures, we’re exceptionally (overly) attuned to the intention and motivation of others, especially when gift-giving. Harvard researchers studied how we perceive intention by inducing two strikingly different kinds of painful shocks: one intentional, the other unintentional. Participants didn’t know the difference between the two, and as expected, intentional shocks were perceived more painful. 

Thankfully, the inverse is true in gift-giving: the same gift is received much more positively if given under good intentions. So perhaps that bottle of wine you plan on bringing to dinner at your in-laws’ may be more sentimental when given with a hand-written holiday card. Intention implies one of the significant advantages a gift has over cash. Unlike cash-giving, gift-giving requires careful thought and intention.

When it comes to gifts, our motivation behind why it was bought, and how we arrived at getting that specific gift makes all the difference. Did you grab the random bottle of wine in the fridge, because you were too swamped at work to get one last week? Or did you deliberately buy a bottle of Bordeaux because it’s Aunt Jean’s favorite? The more apparent the intention is, the more special the gift-receiver feels.

Perhaps we can ditch buying mainstream, branded, and overly expensive gifts to compensate for our lack of time and effort, and go for the crafty homemade ones that remind us about our loved ones. Ultimately, it’s not really about the gift itself (no matter how amazing red wine from Bordeaux sounds), but the thought, intent, and emotional warmth that went into it. But even this can go one bit too far.

Social Psychology and Gift-Giving: Ego-Centricity Bias

Choosing gifts for our loved ones is no easy task. We’re social creatures, not mind readers. But we like to play the role of the latter. As gift-givers, we tend to underestimate what gift-receivers actually want. Consequently, we gift them things we like, not things they actually like. In fact, in 2018, 46% of people have lied about liking a gift they received. The tendency to often assume that other people are more like us than they actually are is called the ego-centricity bias.

Social psychologists tested this idea directly. They compared how much people appreciated gifts that came from two ways: one explicitly requested via a gift registry, the other which the gift-giver simply thought was a thoughtful present. 

The results were repeatedly clear: the gifts most appreciated are explicitly requested ones. Since recipients are better off getting what they actually asked for, gift-givers’ attempt in thoughtfulness got lost in the process. It makes sense if we think about it: What could possibly be more thoughtful than taking the wishes of the person seriously?

How Seasonal Gift-Giving Impacts Consumer Behavior

During the Christmas season, American consumers splurge an average of $800 on gifts with 56% going into debt, and 12% of which admitting their jolly shopping spree may knowingly take them more than six months to pay off.

To billions of gift-shoppers, their intention and thoughtfulness are keys to buying gifts. To companies, Christmas is the perfect time of the year to nudge consumers into thinking social reciprocity—giving gifts in return to those who give us one—is why we should be generous with buying gifts. This ultimately dents the wallets of many, some even going into massive debt. 

Thanks to the neuromarketing tactics companies use, like designing retail stores, marketing to our impulses and paying influencers to post covert content on social media, we are running on a never-ending treadmill of stressful shopping during the holidays. 

And the shopping behavior is trending upwards. Black Friday is no longer the busiest shopping day of the year, the Saturday before Christmas is. Starting with 2000—except from the short dip in 2008 caused by the Great Recession—holiday retail shopping sales have consistently increased, from $399 million to $729 million in 2019 in the US alone. 

Gift-giving is not going anywhere. But now we know about the psychological gymnastics behind it. Ultimately, it’s about balancing good intentions and thoughtfulness while checking our egocentricity. Channel your inner Kevin McCallister while battling with your biases this shopping season. 

Merry Christmas, ya filthy gift-givers!

(And a happy new year too!)

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What’s Next?

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References

Boven, L. V., Dunning, D., & Loewenstein, G. (2000). Egocentric empathy gaps between owners and buyers: Misperceptions of the endowment effect. Journal of Personality and Social Psychology, 79(1), 66–76. doi: 10.1037/0022-3514.79.1.66

Gino, F., & Flynn, F. J. (2011). Give them what they want: The benefits of explicitness in gift exchange. Journal of Experimental Social Psychology, 47(5), 915–922. doi: 10.1016/j.jesp.2011.03.015

Fortunly: Christmas Spending Statistics: Deck the Halls with Boughs of Money, G. Dautovic

Much Needed: Christmas Spending Statistics, Trends, and Fun Facts (US & UK)

Statista: Holiday retail sales in the United States from 2000 to 2019 (in billion U.S. dollars)

The Motley Fool: Here's What the Average American Spends on Holiday Gifts, Maurie Backman