The gift-giving post also had a lot of comments. Here are the best explanations that were given for why people give gifts instead of just money:
1. Zabell pointed out that giving a gift shows that you know that person's interests, and people value that the giver knows them well enough to find a gift that suits their interest. Money is not appreciated because it shows that you do not know enough about the person to get them a good gift.
2. The act of opening a gift is fun. This explanation breaks down because if it was only the opening of the gift, then you could just wrap money in a box and that would be just as good. However, it could be that the suspense/surprise at not knowing what the gift will be is the fun of opening it (if everyone gave money, even if it was in a box, there would not be the same suspense). This is also supported by the fact that unwrapped gifts are not fun.
3. Greg added that it is the time and thought that people put into the gift that gives it more value. However, I would put the emphasis on the thought part because people could spend lots of their time earning the money to give you and it would not be the same as a good gift.
4. Jessica's post about costing the receiver time by giving them money is very astute, but I don't know that it plays a large part in the decision to get a gift versus money because for small amounts of cash getting money actually lowers opportunity cost because you don't have to go to the ATM to get cash.
Overall, the consensus seems to be that the main reason why gifts are given instead of money is that the person receiving the gift gets extra utility from knowing that the person cares about them and therefore knows their interests, and some extra utility from the suspense of opening the gift.
Now let's test our predictions:
1. There are still some situations where people give money as a gift. What are those situations normally? How does that fit into our analysis of gift-giving? Does that contradict our analysis or complement it?
2. What about the fact that people many times give a list of things they want, and then people just go and buy the things off of that list? This strategy does not show that the givers know the recipient's interests. Is that the same as giving money? How does that fit into our analysis?
This article by Robert Frank offers a very interesting perspective in my opinion on why we give gifts, involving receiving gifts that we wouldn't buy ourselves as a way of avoiding guilt.