Everybody Loves Cash. Just Don’t Try to Give Anyone Some

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Why are people so uncomfortable giving the most useful, most practical, and arguably most fun gift of all?

In an op-ed for the NY Times, a Princeton sociology professor traces the history of our ambivalence with giving cash as a gift. Looking back to Vaudeville acts that spoofed the idea of removing price tags before giving a gift—what would happen if you try to do the same with a $50 bill, to disguise how much it’s worth?—and to Ladies’ Home Journal stories from a century ago discussing artful (and inappropriate) ways to give cash, Princeton’s Viviana A. Zelizer, who wrote Economic Lives: How Culture Shapes the Economy, writes that gift-givers have been struggling with the idea of giving cash for decades. Here’s one example of what she’s found:

In the December 1909 Ladies’ Home Journal, for instance, the writer Lou Eleanor Colby said she had found a way to “disguise the money so that it would not seem just like a commercial transaction.” She explained how she had incorporated $10 for her mother into artwork. She inserted dollar bills into two posters; one showed five sad bills not knowing where to go, and the other depicted the happy ending: “five little dollars speeding joyfully” toward her mother’s purse.

Whoah. This makes it seem super easy to tromp down to the mall to pick out a gift.

Speaking of which, there’s a perception that buying gifts shouldn’t be easy. No matter how useful a gift is—and there’s no more useful gift than cash—if a gift is considered too easy to select—and there’s nothing easier to give than something you already have in your wallet—it doesn’t come across as thoughtful. Cash is almost literally a no-brainer of a gift; it is not deemed thoughtful. It might make total sense for all parties involved, but it is not considered thoughtful.

(Side note: Another LHJ story advised husbands that it was OK to give their wives checks, but only if they were presented in a new purse or sewing basket. I’d love to see what would happen if a husband tried to write a check to his wife today. Even if it was handed over in some fancy disguise, few wives I know of would be happy with a gift that’s not all that different than paying the gas bill.)

In the Vaudeville act discussed by Zelizer, a woman winds up crying because she’s unhappy with the idea her Christmas gift (cash) would be used to pay for groceries for her daughter’s family. There’s nothing new, then, with the idea that gift-givers want to hand their recipients something that’s less than practical—something unique, that the recipient wouldn’t have purchased otherwise, like groceries. Likewise, many recipients tend to most enjoy gifts that they wouldn’t have bought for themselves because they weren’t worth the money, or they’d cause too much guilt from self-gifting.

This is one seriously whacked-out game we play in our minds, all brought about because society has embraced certain concepts of gift appropriateness, with the help of various marketing forces. Today, gift-givers uncomfortable with giving cash defer to the gift card, which supposedly is more thoughtful, but is really just a modern-day way to disguise a cash gift.

Whereas giving cash makes sense but is not considered thoughtful, however, giving a gift card is considered thoughtful but often makes no sense.

For evidence of how little economic sense it makes to give gift cards, check out a recent SmartMoney experiment in which a reporter tried to trade in three $25 gift cards for cash at different gift-card exchange websites. At first, a service called CardWoo gives her 50% of the cards’ value. Other exchange sites were paying 60% to 80% of the card’s value.

The popularity of these sites should make it apparent that not all gift cards are considered by the recipients to be thoughtful. They’re clearly much rather have cash. And while I haven’t talked to all of the people who use these sites, it’s fair to assume that they’d rather have had the full amount paid by the gift giver rather than some fraction of a gift card in cash. Which would you rather have: a $100 gift card that you might be able to trade in for $60 or $70 in cash, or a plain old $100 bill?

The SmartMoney story estimates that roughly $8 billion worth of gift cards went unused last year. Another study shows that people using gift cards shop less carefully than if they were spending their own money. Gift-card shoppers were 2.5 times more likely to pay full price compared to shoppers paying their own bills—likely because they simply want to use up the gift card asap, lest they forget about it and add to that $8 billion figure above.

So, before purchasing a gift card, take into consideration how well you know the recipient and whether the card will actually be used in a sensible, enjoyable manner. Too often nowadays, gift cards wind up being gifts—to the retailers, and to various middlemen when recipients try to swap the plastic for what they really wanted: cash.