Bad news: When your partner, friend, or sister says “You really shouldn’t have” on opening that expensive gift – they mean it.

You could have shopped smarter and saved your money instead.

Academics at the Stanford Graduate School of Business showed that:

  • Most gift givers assume an expensive present is better appreciated…
  • …but in reality, gift receivers don’t appreciate expensive presents much more

It seems it really is the thought that counts.

Hey big spender!

Years ago, when I was the first of my siblings to get a higher income, I spent far too much money on Christmas presents.

Nothing that would turn the head of a Kardashian, mind.

Maybe a multi-piece Le Creuset set for the kitchen for my mum whereas before I’d have bought her a cookery book, or some fancy Bosch power tools instead of a Spear & Jackson spade for my dad.

But now I’m back on the good – cheaper – stuff.

That might sound like I’m simply older and meaner.

But the issue wasn’t just that my more expensive presents weren’t really any better appreciated, or that I was miffed when I got a novelty t-shirt back. (Although, shamed, I’ll concede I was miffed).

The trouble was I bought bad presents just because they had more bling.

I was hiding my 20-something insecurities behind a price tag.

Worst of all, my sister told me she felt my gifts made all her presents seem cheap.

Which wasn’t exactly the gift I was trying to give!

Or even if it was (subconsciously, because, again, I was young and silly) it shouldn’t have been.

What matters when you give a present?

Happily we all grow up, and if we pay attention along the way we might even learn something.

Eventually I saw what really mattered to my family was whether we felt like we’d been thought of – and understood – when the gift was chosen.

One of my sisters also went through an ‘expensive presents with a new job’ phase. But now we’ve settled down to giving smaller, more personal presents, which we can all afford, and that we’re usually pretty happy to receive.

Not before time, too, after nephews and nieces entered the gift-buying equation. (Although honestly, I’d much rather invest for them than contribute more plastic tat to landfill.)

Anyway, my family’s experience mirrors what academic researchers long ago discovered. More money spent generally does not equal more happiness.

How convenient!

1: Expensive engagement rings aren’t worth it

In one study, Stanford researchers looked at engagement rings – a one-off big ticket item where you might expect extra expenditure to pay dividends.

But the academics found:

  • Men consistently thought their rings were more appreciated by their fiancées the more expensive they were.
  • Fiancées did not rate themselves as any more appreciative if the rings were more costly.

This doesn’t really surprise me.

While there’s a lot of marketing pressure on young romantics to prove their love at the jewelry store, the fact you’re asking someone to marry you is about as big a statement you can make.

2: More expensive birthday gifts aren’t more appreciated

In the second study, the Stanford researchers asked participants to think about a recent birthday gift:

Participants described a variety of gifts, including T-shirts, jewelry, wine, books, and home decor items.

Again, those who were givers expected that more expensive gifts would make the recipients feel significantly higher levels of appreciation.

In contrast, the recipients said they did not feel greater appreciation levels for gifts that had cost more.

Fact: It’s just not worth spending that extra chunk of cash. Researchers found givers would spend $100 on gifts that receivers would only pay $80 for. The excess $20 is a ‘deadweight loss’ in economic terms.

Now you know why those Christmas hampers are so overpriced.

If you see something someone would love that costs a little bit more and you can easily afford it, then by all means buy it.

Otherwise, this study is a green-light to cut 20% off your gift budget.

3. Straight-up more expensive gifts aren’t necessarily more appreciated

The research behind this article is a few years old now, as shown by the final strand of the Stanford study:

In the third study, participants were asked to think about giving or receiving either a CD or an iPod as a graduation present.

Once again, those who were randomly assigned to be ‘givers’ thought by giving the more expensive iPod their present would be appreciated more in contrast to the CD.

The ‘receivers’ rated no difference in appreciation levels, regardless of which item they were told to think about getting.

I doubt anyone would much appreciate getting a CD in 2020! Even an iPod is a bit passé in the iPhone era.

Also, this study was based on people imagining how they’d feel. Most of us would like to think we’re virtuous souls and not particularly materialistic. Reality may vary!

But if you are going to bring imagination into your giving, then one tip is for you to imagine the long-term future usage of the gift.

A 2016 study concluded that:

Given the widespread nature of giver-recipient mismatches, how can givers choose better gifts?

The obvious answer is that givers should choose gifts based on how valuable they will be to the recipient throughout his or her ownership of the gift, rather than how good a gift will seem when the recipient opens it.

Now for the obligatory TED lecture

The good news is that giving is good for you, however much you spend, as this video from TED explains:

This makes me think maybe I should have created one of those Donate to Monevator buttons that people have asked about for years…

I could have made some of you happy, and done ourselves a favour along the way!

Save money buying gifts

The message from academia is clear. Money doesn’t count for much when giving gifts, but thought and motivation matters.

Some suggestions:

  • Don’t feel guilty about setting a gift budget. You have to live within your means.
  • Put more time into choosing a gift the recipient will really like.
  • If you believe you haven’t got enough time to shop for something special and so instead you’re reaching for a thermonuclear price tag to get you off the hook, think about how long it’d take you to earn the money you’re about to spend. This process you should ‘buy’ you several hours at least, and a cheaper and more appreciated present.
  • Try to make something happen – an experience or a one-off event – if you really want your gift to be remembered.

Finally, if any of my friends or family are reading and thinking “poppycock!”, then please know you’re welcome to stick to buying more expensive gifts – and that I’ve been lusting over this copper-finished Hotel Chocolat Velvetiser hot chocolate machine all year!

Happy giving.



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