The psychology behind giving and receiving

New Unicef NZ ambassador Jonah Lomu is supporting the charity's Say No to Naff campaign, to encourage people to buy Inspired Gifts this Christmas. Photo / Supplied

My children were horrified last week when they heard I'd written an article asking whether we should ban Christmas presents.

The idea behind that is the Kiwi Christmas has got completely out of hand financially. People are going into debt, quite literally, to buy gifts that are often unwanted.

There will, for the record, be gifts under the tree in our house come December 25. But before we go out and spend a small fortune on buying Christmas presents, it's worth knowing what's going on in the human brain when the issue of gift-giving comes up and how retailers capitalise on that psychology.

Academics in the fields of psychology, marketing, economics and other disciplines make a living by studying gift-giving and banning presents, my children will be pleased to hear, isn't good for human well-being.

We don't just give gifts because we care about the recipient or we feel obliged to give gifts at a certain time of the year. Gift-giving is deeply rooted in our psyches and in social customs.

Surprisingly for the layperson it's not the receiving of gifts that matters most for adults, says associate professor Carolyn Costley of the University of Waikato's marketing department.

"Gift exchange creates and reinforces emotional bonds between givers and receivers," says Costley, citing an academic article entitled "If money doesn't make you happy, then you probably aren't spending it right".

"In fact the researchers [Elizabeth Dunn, Daniel Gilbert and Timothy Wilson] reported several studies that found people who spent money on others were happier than people who spent it on themselves."

Giving, she says, activates that part of the brain typically associated with receiving rewards.

Gifts have other important messages attached to them, says Andrew Parsons - associate professor of retailing at AUT Business School. They can be symbolic, functional and experiential or a mixture of the three.

If Parsons gives his wife diamond earrings for Christmas, for example, it is mostly symbolic, but also functional and experiential.

The choice of gift differs depending at what stage of a relationship two people (or organisations) are, says Parsons. Someone who is establishing a relationship will give a different gift to another who is growing, maintaining or ending a relationship. That is why, for example, we give flowers or chocolates on a first date, rather than sexy underwear, says Parsons.

Retailers are very aware of this consumer psychology and attempt to get messages across to the buying public that their goods or services are excellent gifts because they tick the right boxes.

"The problem with that is that [retailers] are appealing to the buyer who may have a certain message he or she wants to send, which the receiver doesn't relate to," says Parsons.

In real life, for example, a friend may want to give me a luxury hair-care gift box. I, on the other hand, metaphorically recoil in horror at receiving chemical-laden products wrapped in unnecessary packaging. My friend has either given me something she would like to receive herself, or she has gone into a retail store desperate to buy a present and latched onto the retailer's "solution" to her problem.

If the retailer and shopper get the gift right, it's a win-win situation. Parsons, however, outlines a scenario where a husband hits the stores at the last minute desperate to find a present for his wife and buys a gift on the strength of the retailer's marketing message. "Get it wrong and you are in trouble for the rest of the year."

Gift receiving often comes with a sinking feeling. That feeling comes from knowing that the other person doesn't understand the relationship, says Parsons. They haven't listened or considered the other person's perspectives.

Conversely a gift is especially meaningful when the receiver feels that the giver "really knows" them, and chooses a gift that corresponds with their identity, says Costley.

In a study reported by the British Psychological Society, Harvard and Stanford academics Francesca Gino and Francis Flynn found that people are happier if you simply buy them something from their wish-lists.

The pair asked 200 participants to recall giving and receiving wedding gifts.

Those who received gifts from their wedding list were more appreciative than those who were given surprise gifts they hadn't asked for.

Those who gave the gifts thought, wrongly, that the gift was appreciated just as much whether it was from the wedding list or self-selected.

While some people embody the whole spirit of giving and Christmas, there is no true altruism in gift-giving, says Parsons. The giver gets something out of the exchange.

There is also a dark side to giving. Gift exchange behaviours can be problematic - especially for psychologically needy people and the recipients of their giving. They can burden others financially and psychologically by giving too much. The gift-giving may be based on a need for an anchor in their life, which they get through giving gifts, says Parsons.

Gifts can also create and exacerbate interpersonal conflict. Pity the poor recipient who feels obliged to reciprocate at the same level, be that in terms of the dollar cost, frequency of giving or number of gifts, to avoid conflict.

People can also become trapped in rituals, according to researchers from Northwestern and Chicago universities.

A classic example are people who feel they need to give gifts of the same value as they receive.

Ironically well-chosen gifts are appreciated no matter what they cost, says Costley. They have something of the giver attached to them.

The psychology of gift-giving is very interesting when it comes to children. The child, says Parsons, may think they're choosing a functional gift, but the parent assigns a lot of symbolism to it and will feel the need to wear a hideous tie, for example, at least until the child forgets about it.

While parents may give a child one gift he or she actually wants, they often give additional presents, such as educational ones, because they think they should.

It's common for grandparents to give presents designed to socialise a child, which is why, perhaps, children often recoil at grandparents' choice of presents.

"The children don't want to be educated or socialised," Parsons says.

Parent-directed gift-giving, where the parent goes out with the children to buy presents on behalf of the children, is a real minefield.

How many husbands, for example, can choose an appropriate gift for their wives, let alone give advice to the children on choosing presents for her?

While I believe logically that we really should limit the number of people we give gifts to, there is also a message in not giving. It could be saying I don't want to develop this relationship.

Where this ties back into personal finances is about spending money wisely. It's nice to give gifts. But what's the point of spending $2, $20, $200 or $2000 on something the other person doesn't want?

It's a sure-fire way to rack up Dumb Debt, as's new campaign timed for Christmas says. Or for those people whose finances are in the black, just think of the opportunity cost of the lost compound interest on that spending.

Getting gift-giving right isn't that hard. It's a matter of asking the other person what they want and/or listening to them.

While some people hate modern concepts of wish-lists, gift vouchers and re-gifting (parcelling up something you don't want and giving it to someone else) are in many cases a more sensible financial approach to gift-giving.


By Diana Clement | Email Diana

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