Thoughtful gift-giving: How to avoid wasteful generosity

By Leo Jaymar Uy

WE’VE BEEN giving gifts for as long as we can remember. Beyond a simple gesture, it’s how we say thanks, celebrate milestones, or sometimes, win someone over.

In the case of acquaintances and colleagues, the gifts tend to be low stakes and more practical. Food packs, organizers, towels, and coin purses are some of the common (and safe) choices. In contrast, gifts exchanged among loved ones invite more variety. The assumption is that we know each other well enough to tailor presents to actual needs or preferences, raising emotional stakes.

Viewed through this lens, gifts function as a “social currency” of sorts. They act as proxies for understanding, signaling attention and emotional fluency in ways that words often can’t.

And yet, how do we know if a gift truly lands?

Economist Joel Waldfogel attempted to quantify this dynamic in his 1993 paper “The Deadweight Loss of Christmas”* wherein he essentially argued that gift-giving often results in a “deadweight loss” (a loss of economic efficiency) because recipients typically value gifts less than what givers paid for them. In his paper, he surveyed students to estimate how much they would be willing to pay for gifts they received, and then compare these valuations to the actual prices paid by gift-givers, barring sentimental value.

The results appear to be intuitive and rather unsurprising. On the one hand, gifts from close friends and romantic partners tended to perform better, that is, the perceived value of the gifts approximates the actual cost of the gifts paid for. On the other hand, gifts from extended family members or distant acquaintances missed the mark, reflecting a huge gap and thus sizeable loss of perceived value. Overall, he estimated that between a tenth and a third of the value of holiday gifts is destroyed by gift-giving.

Waldfogel revisited the topic in his 2009 book Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays wherein he reiterated his critique of holiday gift-giving, but also conceded thoughtful gifts can rival or even exceed the value of items that would have otherwise been bought by the recipients themselves. Thus, he proposed alternatives such as charitable donations and gift cards believing they minimize waste and better match preferences while also retaining the spirit of giving.

Over time, the way we give gifts has changed. More people now opt for digital or experience-based presents such as e-wallet credits, mobile load, store vouchers, or travel perks. These choices offer convenience and a personal touch, while avoiding the discomfort that sometimes comes with handing over cash (unless you are a five-year old waiting for that crisp P1,000 bill from your rich uncle).

Regardless of the format, the intent of giving a gift that resonates remains. Thus, even with the best intentions, the activity may still end up being wasteful. Some items end up getting re-gifted or tucked away unused, while others are used out of obligation to perform gratitude (“I haven’t seen you wear the shirt I gave you.”) or to exercise polite restraint (“These cookies are… experimental”). In these cases, the gift shifts from a gesture of care to a burden. What was meant to signal closeness or at least offer utility, ends up being a cost to the recipient (through that burden) and to the giver (through the actual expense).

So how do we give with intention? Here are some suggestions that might help:

• Think about what they actually need. Self-explanatory.

• Listen for hints. Even throwaway comments can reveal more about one’s preferences.

• Gift cards aren’t lazy if they’re thoughtful. Just make sure they match the person’s interests. If she loves books, go for a bookstore voucher. If he’s into gaming, grab credits for his favorite platform. If they’re into nothing, then go full tito mode and get a handkerchief — classic, safe, and says “I tried.”

• Food still works. A favorite snack, a nostalgic treat, or a curated basket can hit the right note. Comforting, personal, easy to enjoy.

• Just ask. A quick chat or a shared wish list can save everyone the guesswork. Sites like elfster make it easy. Even a Google Sheet does the trick.

• Show up. Visit your parents. Message that friend. As the cliché goes, presence may be the best present (an easy out for the “gift-averse,” but one that still works)

Bottomline: A well-chosen gift, whether it meets a need, strengthens a bond, or simply spreads holiday cheer, can carry more weight than its price tag suggests. In a season often marked by excess, it is intention that gives a gift its meaning. That is the real return on investment.

*Waldfogel, J. (1993). “The deadweight loss of Christmas.” The American Economic Review, 83(5), 1328–1336.

Leo Jaymar Uy was research head at BusinessWorld from 2017 to 2021 and currently works in finance. He enjoys video games, collects obscure but oddly satisfying trivia, and occasionally thinks about the Roman Empire.