Want to give the best gift this Christmas season to that special someone? If so, then just pick up a gift card from their favorite retailer or give them cash. It’s true, our wife or girlfriend wants us to be sensitive and mindful of their needs and we can show them by giving cash or gift cards. My explanation stems from a discussion in a Microeconomics course I took in college and is rooted in simple economics.
We all possess an innate desire to maximize our utility or satisfaction in the goods or services we buy. That level of utility is limited by our amount of income, whether big or small. For simplicity’s sake, let’s say we have a choice between only clothing and jewelry we could buy. Women derive different levels of utility from each of the two different goods depending on their prices. We could choose to buy all of one good over the other, but that is highly unlikely because she will not obtain the most utility or satisfaction from us purchasing all clothing or jewelry. Subsequent units of one good may not bring us as much utility as the previous. As a result, we must purchase a combination of goods whose total utility exceeds that of purchasing all of one good. This results in all buyers optimizing their utility through a combination of goods available at their income level. One quantity of a good is substituted for another to obtain the person’s optimal level of utility.
By now you might be asking how this all fits into giving cash and gift cards as presents. It’s simple; similarly as people have income limitations on the combination of each good they can buy, we tend to set a dollar limit on how much we will spend on a gift for someone. We could be insensitive and choose what good or combination of goods to buy for our wife or girlfriend, but we’re certainly not like that. Instead, we get them a gift that allows them to maximize their utility or satisfaction. Your wife or girlfriend can then select the combination of goods that brings them the most utility with their cash or gift cards. You could even go along for the utility maximizing experience if you feel inclined to.
This type of gift giving is truly thoughtful and sensitive. You are thoughtful in that you really took the time to find the right gift that would best fulfill her needs so she could get the things she really wants, enabling her to maximize her utility. In fact, you should always give cash or gift cards for any gift giving occasion to anyone, that way they can maximize their own utility too. You’ll be the talk of all female social circles.
Earn something extra for yourself by using a cash back credit card, travel reward credit card or other reward credit card to purchase gift cards.
