My two kids celebrated birthdays this week. They used to get dozens of birthday gifts each from friends and family. These were often interesting for a few days. Then they joined the donation pile.
My wife and I said gifts weren’t necessary. We try to be conscious consumers. We want people’s company at birthday parties, not their presents. But they felt obligated to bring gifts.
Then we discovered ECHOage. Instead of gifts, people give money. We donate the majority of the money to a charity. Our kids use the remaining funds to buy a few gifts. We encourage them to buy things they’ll value a long time.
What gifts signal that cash doesn’t
It works. But it’s an imperfect solution. Those unfamiliar with ECHOage can find the concept uncomfortable. You can tell when you explain it. And some people can’t withhold a gift even if they already gave to ECHOage. What’s going on?
The answer is signalling. Economist Greg Mankiw has a nice (if a bit old) summary post on this:
In some ways, gift giving is a strange custom…
[P]eople typically know their own preferences better than others do, so we might expect everyone to prefer cash to in-kind transfers…
[T]he act of picking out a gift, rather than giving cash, has the right characteristics to be a signal. It is costly (it takes time), and its cost depends on private information.
So people don’t like giving cash because giving a gift signals two things. First, that they took the time to think of something. Second, that they know the recipient well enough to choose something they would like.
While this makes sense, I’m not convinced that it’s immutable. After all, for some special occasions, like weddings, giving cash is acceptable.
So I hope we can shift the culture in favour of more conscious gift-giving. For the sake of the environment. And keeping our home decluttered.