At birthdays, Christmas and other celebrations, deciding what gifts to buy for friends and family can be a major source of stress and anxiety. After all, unless you have a real score to settle, nobody wants to give a dud gift.

Yet often, despite the best of intentions, gifts fall flat and recipients end up less than satisfied with what they have received. Many people even go so far as to return unwanted gifts to the store, or “regift” them to others or to charity.

In my work at the National University of Singapore Business School, much of my research work focuses on consumer psychology, including how people decide what to buy and how they make decisions when purchasing gifts for others.

When giving gifts, people tend to choose items they expect will trigger the biggest immediate emotional reaction from the recipient

In a recent research study with a colleague at the University of Chicago we looked at why gift-givers often choose gifts that fall short of the mark.

Our results showed that when giving gifts, people tend to choose items they expect will trigger the biggest immediate emotional reaction from the recipient – for example a broad smile, a squeal of delight, or even a hug for the gift giver.

‘Wow’ factor

However, when placed on the other side, as a gift recipient, people prefer and place greater value on gifts which will bring them greater satisfaction over the long term.

We also found that whether or not the giver would be able to see the recipients open their gifts plays a significant role in making gift decisions. Indeed, when givers learned they would not be witnessing the recipient’s reaction when unwrapping the gift, their preference for gifts with a higher “wow” factor was significantly reduced.

The reason for this comes down to how humans use non-verbal displays to communicate our emotions – for example, through facial expressions or gestures – and how we interpret and value those displays in others.

Such skills develop from an early age. As we grow we internalise these emotional responses, using them as a guide for anticipating how others will react and make our decisions accordingly.

Several psychological studies, for example, have found that people proactively simulate or forecast how their decisions would impact other people’s emotional reactions and correspondingly adjust their behaviour.

So how does this apply in the process of choosing and giving a gift?

‘The smile-seeking hypothesis’

For our study we conducted a series of experiments, each involving around 100 participants or more and across a broad age range, centred on various gift-giving scenarios such as Christmas, a wedding shower and Valentine’s Day.

From our experiments we found consistent evidence that gift-givers seek and derive pleasure from the receiver’s anticipated display of emotion when the gift is opened – a process we dubbed “the smile-seeking hypothesis”.

This means that gift-givers tend to opt for the gift they expect will trigger the most enthusiastic emotional response from the recipient, even when they know of another option at similar cost that would actually give the recipient greater long term satisfaction.

Another significant factor at play is that a person’s immediate emotional reaction to a gift does not always reflect their deeper satisfaction from receiving it.

Because the receiver’s assessment of satisfaction with a gift is a more deliberative internal process it tends not to manifest itself visually, meaning there are fewer cues for gift-givers to pick up on.

Nonetheless, because these emotional signals are valued and actively sought by gift-givers, these tend to sway givers’ purchase decisions towards particular choices, such as gifts with that extra “wow” factor.

In many situations therefore gift recipients tend to reward givers with signals of gratitude that do not correspond with the long-term value they derive from the gift.

A case in point is gifts of cash. Many of the participants in our study said that as recipients they often found that gifts of cash were the most appreciated and satisfying. However, because cash gifts tend to elicit only a low key emotional response – e.g. “thanks, that’s very kind” – gift-givers try to seek out more impactful gift options instead.

At times of giving, it is often said that it is the thought that counts. Indeed, the phrase is sometimes used as an excuse when a gift is particularly dull or inappropriate – or even, ironically, when very little thought has been put in at all.

What our study shows is that when choosing gifts we can be swayed into choices that deliver more on our own need to be immediately rewarded than on maximising value for the recipient.

In other words, even when we do put thought into choosing a gift, we can miss the mark by thinking about the wrong things.