The most wonderful time of the year


“It’s the most wonderful time of the year!  It’s the hap-happiest season of all. With those holiday greetings and gay happy meetings… (lalalala)”

Ah, Christmas. The time where kindness and merry making is felt all over the Christian countries and everyone is in the mood for generosity. All the presents are in check and wrapped for the annual gift giving – the excitement, mystery and joy of it all. However, this is also the time where rational economists vomit on the impracticality of the gift giving tradition.

I always valued gift giving and the idea that “it’s the thought that counts” but there is a rational explanation why economists find gift-giving problematic. Here’s an example:

There was one Christmas when my Aunt gave a pink top with polka dots on it. It had a white collar and ruffle stuff. It wasn’t that bad (when you’re 12 it still looks decent) but I wasn’t really a fan of it. However, i still I decided I’ll wear it. It’s a Christmas present for Pete sake! I have a heart too, you know!

I only wore it once. *sad

The money she used to buy me that present is now inside the pockets of those corporate businessmen. The present… only got out of that closet once, when we celebrated New Year 2005 (thought it would be lucky).

Rational economist’s suggestion: Just give them cash (but I’ll add another suggestion: Ask for their wishlist).

Come to think of it, I probably live with a bunch of economists. I don’t know about you guys but I stopped receiving gifts when I was seven (?) and from that point stopped receiving gift wrapped stuff and started receiving money pouches.

It sound reasonable but I think there is more to it than just gifts and cash. What rational economists see is just the technicality of it all but they tend to neglect the psychology behind gift giving. It may seem impractical but what we do not know is that there is actually gain rather than loss when you give gifts.

In a study, they found out that there are differences in neural activity for decisions that involves donating money versus receiving money.


Studies showed that:

“While receiving money monetary rewards activated the mesolimibic reward system, including the dorsal and ventral striatum and the ventral tegmental area—as would be expected of something that gives us positive reward—when people donated money to a charity, the same network showed even greater activity—and the activity spread to the subgenual area (implicated in social attachment), which had remained inactive in the pure monetary reward choices. “

Which means that giving gifts gives us more joy rather than being the recipient of the gift.

But there is something deeper than the giving of the gift itself. The actual value of the gift is the impact the gift will have on the recipient and the effort and thought that went into buying the gift.

My aunt might not have guessed that I would like a spy kit for Christmas that year but at least she had taken the time to think of what to give me. That there is an effort to shift from the self’s own outlook to someone else’s. Thinking about what would be suited for the recipient (me).

So I guess there is no need for a wishlist or cash pouches this Christmas because that’s not what gift giving is about? Christmas may just seem like another holiday used by capitalists to rip everyone off but it’s another holiday to have you ventral tegmental area and striatum go bananas when you pick out a gift for your Secret Santa this year so I guess it’s a win-win situation.

Happy Holidays and Enjoy your Christmas shopping! 🙂


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