Gifts in cash versus gifts in kind

Giving gift in cash has a lot going for it. You don’t need to make that shopping trip racking your brain on what to gift. You save both time and expense — the expense you would have incurred on transportation, for example, to make that trip to the mall.

Instead, just take a crisp bill, or a bunch of them, and shove them into an envelope, and slip it into the newly-weds’ palms.

What is more, it also yields the receiver considerable degree of freedom, and any day seems to beat receiving a ‘milk cooker’ or a laser lamp or a polyester tie. 

And yet, on occasion, the reverse may be true. Take that generic milk cooker. You would have been an unusual couple in the 1970s if you didn’t receive half a dozen of them on the eve of your wedding reception.

Assuming you used a milk cooker at all, you still had five spare ones, the best use for which was to palm them off as gifts in someone else’s wedding; may be that of your boss’ daughter or neighbour’s nephew.

After all who would know what you were carrying as you slowly ascended up the queue to the reception rostrum seating the brand new couple on red thrones?

Since these generic milk cookers and laser lamps make nearly ‘fungible’ gifts, I have often wondered why an organised and environment friendly market of sorts did not develop, in which elegantly wrapped — but empty and suitably weighed — boxes could simply be passed on as gifts again and again, at practically no cost. After all a milk cooker or a polyester tie is not something one is seriously going to put to use.

Now, it may well be that you almost prefer to receive milk cookers as gifts, rather than cash, because milk cookers can be easily recycled at zero cost.

But can’t you do the same with cash, which is so much more fungible? That is, if you received Rs1,000 as gift, what prevents you from giving away Rs500 from the corpus as a gift to someone else? Nothing, except your innate human nature.

Remember, since losses always loom much larger than profits (see earlier columns), giving away that Rs500 pinches you much more than receiving the same amount pleases you!

This is not quite the case with the spare milk cookers, even if they are priced about the same, by the way! Thus, there are occasions when receiving a milk cooker in gift saves you much mental tug of war as compared to receiving cash!

So then, you can never be sure whether to gift your friends in cash or kind. Right? Not quite; not if your budget for the gift is relatively high.

Typically, luxury gifts score over large cash gifts. For example, your doctor brother may prefer a gift of a Rolex watch over Rs2 lakh in cash (make it a Breguet for the super rich) on his wedding. This is because he is unlikely to use the cash gift for purchasing a Rolex, for example.

We typically postpone or even avoid extravagant purchases for ourselves, as often there is a slight guilt associated with profligacy.

That’s why it becomes pleasurable to receive a luxury gift in kind than an equivalent sum in cash, because even though you now have the coveted asset, you are not responsible for its acquisition, and hence there is no associated guilt.

So next time you are seriously considering a large spend on a gift, make it a luxury item, like a Mont Blanc card holder for an absurd Rs10,000, because your friend may never indulge in such extravaganza if you gave him a cash gift instead.

Expensive trinkets bring more pleasure than their monetary equivalents can!