Gift-giving in India, as common as sipping chai, takes centerstage during festivals and the wedding season, transcending cultural boundaries and becoming a core element of social rituals. Beneath the surface of material exchanges, selecting the perfect gift involves a complex interplay of emotions, with good gifts reflecting thoughtfulness and bad ones prompting questions about familiarity. Gifts embody tangible emotions—love, gratitude, and, at times, social obligations.
While gift-giving is mostly viewed through a lens of sentimentality, it yields a profound influence on economic activities as well. So, as we gear up for the gift-giving extravaganza, let us also try to comprehend the psychological intricacies of giving gifts and the economic aftermath.
Gift gifting is associated with multiple psychological constructs. For instance, it often finds its roots in kindness. Kindness has proven health benefits such as increased longevity of lifespan, feelings of love and happiness, pain relief, and reduction in blood pressure. Studies have proven that spending money on others instead of on ourselves helps us feel happier.
Reciprocity, a key motivator in gift-giving, is believed by researchers to foster trust and cooperation, providing an evolutionary advantage to individuals with stronger social bonds. Additionally, the act of giving gifts might serve as a form of signalling, indicating the availability of resources and potentially enhancing survival prospects. This dual function suggests that the exchange of gifts not only reinforces social bonds but also subtly communicates an individual's readiness to navigate the challenges of survival.
Researchers have explored how perceived gift value affects satisfaction and future compensation intentions, triggering reciprocity. Understanding consumer behaviour involves considering individual value perceptions. Gifts are evaluated based on economic value (price), functional value (usefulness), and social value (enhancing social status). A study found that satisfaction acts as a mediator between perceived gift value and the intention to reciprocate. Stronger connections between giver and recipient lead to an increased satisfaction and a greater willingness to reciprocate, underscoring the impact of relational ties on gift dynamics. Also, when someone gives us a gift, it creates a social obligation thereby expecting the receiver to reciprocate. Such reciprocity can then, in turn, help forge social bonds and foster a sense of connection.
While gift-giving may be a complex process, individual differences in the giver’s ability to understand the emotions of the receiver have been little researched. The giver's ability to understand the emotions of the recipient, termed emotional understanding (EU), also affects gift-giving behaviour. Higher EU correlates with increased spending on gifts, with relationship closeness moderating this effect. Additionally, those with higher EU not only spend more but also experience greater happiness.
Studies in similar contexts also shed light on the various dynamics that surround gift-giving. Some evidence indicates perceived loss in gift value, manifesting as the difference in the value the recipient places on a gift versus the actual cost of the gift, can lead to people opting to give cash instead of an in-kind gift; with such behaviours believed to be associated with relationships outside of immediate family & friends.
Another study looking at extra-household (i.e. outside of the household) gift-giving showed that there is a strong association between the likelihood of spending money for gifts with increasing income & falling family size. So a relatively well-off individual or someone who’s living with their spouse and children is more likely to spend money on gifts for friends & colleagues, than someone living paycheck-to-paycheck or with their extended family. A similar relationship is observed when we look at the expenditure on gifts instead of the likelihood of giving a gift. A possible theory put forth is that as family size increases, gift-giving expenditure shifts more to ‘within’ household gifting than to extra-household gifting. The same study also showed greater income elasticities at lower income levels for gift expenditures, indicating while gift-giving might be important culturally, they do not take precedence over the physical well-being of an individual.
It is important to note that all of these studies have been exclusive to the US, but allow us to ask important questions on gifting dynamics for the Indian context - especially with the trend in family units towards nuclear families. Also, how might India’s unique and diverse cultural & religious beliefs moderate gift-giving & expenditures?
One concept that certainly plays a key role in gifting in the Indian context is one’s social status. The choice of gifts, their quality, and the occasions on which they are presented all carry nuanced messages about the giver's understanding of societal norms and values. Festivals like Raksha Bandhan and Diwali, and weddings while marked by a symbolic exchange of gifts now see huge industries trying to capitalise on this age-old tradition. With the world witnessing globalisation, shoppers are now able to sit in the comfort of their homes and browse the world in search of the perfect gift for their loved ones. People are willing to shell out more money and this is what corporations are acutely aware of.
From an economic perspective, how much actual value that money translates into has been debated by researchers. Past research has indicated that the inability to perfectly match the gift to the recipient's preferences can result in a potential loss of value, sustaining the production of goods & services that might be less desired by those receiving them. This has been strongly contested and two other studies using more diverse samples, one of those going so far as to utilise auctions for gift valuations, have refuted this view. Researchers have questioned why a recipient might have perfect information on every good & service, and suggested even with information individuals could be constrained by mental accounting for things they intend to buy.
At the end of the day, whether or not any value is lost or gained, the gifting industry appears to have a positive future. Though some areas such as corporate gifting are in a bit of a slump owing to the economic conditions; the industry as a whole, estimated to be worth around $30 billion, is predicted to grow at a rate of 20-25% annually. Other estimates have pegged just the online arm of the gifting industry to grow to nearly $70 billion by the year 2039.
With each passing year, gifting gets more nuanced with people opting for personalised gifts not just for their relatives but even for their pets. Also, the kind and consideration of gifts that people are giving keeps widening in range. Concepts such as environmental & social awareness have seeped into the consumer mindset, influencing the kind of gifts that people are looking to buy. As incomes rise & new gifting concepts spread around, there certainly is a lot of gifting that will be happening — and for companies to capitalise on — with this new cohort of Indians.
Abhishek Vajjala and Bhavleen Singh
