Every year, I play a game with myself: I make a mental note of when I first hear Mariah Carey’s “All I Want For Christmas Is You”. That’s when I know Christmas has properly arrived in Singapore. 

Last year, it was a respectable November 1st; this year, October 28th. You win, IKEA. In the song, Carey insists she doesn’t care about the presents underneath the tree, and that all she wants for Christmas is, well, you. As the reigning queen of the holiday playlist, her song embodies something virtually all Christmas songs have in common: the gifts people say they want are never practical, never rational, and certainly never cash.

And yet, in theory, the most efficient gift is cash.

In 1993 (and in December no less—timed deliberately, I assume…), American economist Joel Waldfogel published a paper with the cheeriest possible title, “The Deadweight Loss of Christmas”. 

He argues that most of us are terrible at buying gifts. The things we choose for someone are usually worth less to them than what we had paid. For instance, you might have spent S$50 on a sweater for your friend; she would probably only have paid S$30 for that same sweater. That extra S$20, in economic terms, is value destroyed. Multiply that across an entire festive season and you get what Waldfogel estimated to be billions of dollars in global inefficiency.

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He wasn’t alone—studies in other countries have found the same pattern. Gift-givers everywhere tend to overestimate how much others will value the things we lovingly choose. And so, from a purely economic perspective, the most efficient gift is cash; the recipient will derive exactly as much value from it as we put in.

This was the logic my uncle adopted one year when he was unexpectedly put in charge of Christmas presents. We are a big family, and he was a busy person. Rather than trying to figure out what to buy for each of his 14 nieces and nephews, he slipped S$20 into red packets, labelled them with our names, and hung them on the family Christmas tree. Efficient—yes. Exciting—less so.

This family story is a glimpse of what behavioural science tells us—gift-giving is about more than dollars and cents. We also make choices based on social rules—demonstrating care, maintaining trust, or avoiding awkwardness. ​​We constantly balance the tidy logic of efficiency with the emotional meaning a gift is expected to carry.

Consider the Singaporean tradition of giving cash at weddings. Here (and across much of Asia), it is widely accepted—expected, even—to give a cash gift roughly equivalent to the per-head cost of the wedding celebration. 

Most guests anchor their gift to that number. It’s a handy reference point that blends social expectation with the desire to avoid any awkwardness about giving “too little.”

Behavioural science helps explain why this works so neatly in practice: it reduces uncertainty, provides a socially accepted anchor, and signals thoughtfulness and recognition of the couple’s effort. Economically speaking, it is also efficient.

Whether one sees wedding angpow (red packet) culture as tradition or transaction, it is nonetheless a fascinating illustration of how cash gifts can also carry meaning far beyond its monetary value. They sometimes bear the weight of norms, emotions, and the unwritten rules of a community.

In behavioural terms, gifts are not just transfers of value, they are expressions of care. Economist James Andreoni described it as “warm-glow giving”—the quiet satisfaction of generosity and the psychological reward we get from the act itself. The gift isn’t just about the recipient; it is also about the giver. 

Experiments consistently show that people feel happier when they give—even when the gift is small or anonymous. This is why warm-glow giving has become a cornerstone in the study of generosity.

This is also connected to what researchers call signalling—the way our actions quietly communicate who we are and how we feel. A carefully chosen book inspired by something a friend mentioned weeks ago says I listened. A handmade card says I care. A last-minute store voucher says I panicked but I tried.

These patterns are surprisingly universal. In a review of studies on charitable behaviour, Bekkers and Wiepking concluded that the same basic impulses behind multimillion-dollar philanthropy—emotional resonance, meaning, and the desire to signal one’s values—are the very same forces at work in the tiny gifts we exchange with the people we love. The scale changes, but the psychology does not.

A simple way to see that psychology in action is in the smallest gifts. When my daughter first started primary school, the school bookshop was the most wondrous place for her. For the first time, she was able to buy something with her “own money” (ie, her allowance). She’d buy me little gifts all the time—some days, a marble; other days, a bookmark. They never cost more than 50 cents each. 

Then one day, she got me a bright glittery pink artificial flower stuffed in a recycled chicken essence glass bottle. She paid S$1.20 for it. Deadweight loss, Waldfogel might say.

But to me, it was priceless. I love flowers, and she knows that. So when she saw the brightest, shiniest flower in the bookshop, she felt she had to buy it for me. The overpriced, slightly gaudy, probably re-purposed flower was a signal from my then seven-year-old: Mama, this made me think of you today.

Her little gesture captured something that no spreadsheet or economic model can—her thoughtfulness, her attention, her care. Behavioural science calls this “emotional surplus,” but in everyday life, it’s just that warm, human feeling that lingers long after the gift is unwrapped.

So while Waldfogel might have worried about the deadweight loss of Christmas, behavioural science offers a more hopeful counterpoint—the psychological value that a good gift can create.

Sometimes it’s about anticipation—the slow-building joy of looking forward to something. A subscription to a weekly magazine (like Jom!) or an escape-room experience planned in advance. Researchers name this “anticipatory utility,” or the happiness of having something nice waiting for you. Studies even suggest that people often enjoy the anticipation as much as the experience itself.

Sometimes that value comes from experiences. As a birthday gift, I once accompanied a friend to a crochet class that she really wanted to do. She had a great time. I, on the other hand, discovered that I do not possess the world’s finest motor skills. But shared experiences bring us closer, maybe especially when they are imperfect.

Then, there are gifts that signal attentiveness: one of the sweetest gifts I received was a S$30 shopping voucher. It wasn’t the voucher that moved me but what it was for—a friend knew I was saving up for a coffee grinder and hoped that her voucher would help me inch closer. Attentiveness wasn’t about the voucher; it was that she remembered.

And so perhaps Mariah Carey understood something economists needed regressions to prove. When she belts out that all she wants for Christmas is “you,” she’s really naming what behavioural scientists keep finding: what we value most in a gift is the personal connection it signals.

So yes, give the practical gifts if they fit the moment– the red packets at weddings, the vouchers when they’ll genuinely help. Also give the small, slightly impractical things that light up someone’s day—a bauble or ornament that serves no particular purpose other than to make someone smile. And then there are those gifts that are essentially free– something homemade, something fixed, or something done so the other person doesn’t have to think about it.

What’s important is that your gift says, I thought of you today.

Because while a gift is an economic choice, whether or not money changes hands, it is one that is rich with meaning. The value isn’t in the price tag but in the behavioural logic that sits behind it.

Happy holidays, everyone—I hope you give and receive a meaningful present this season (even if it’s inefficient). See you in the new year!

Serene Koh is a behavioural scientist and director of the Behavioural Insights Team in Singapore. She also teaches behavioural science at the National University of Singapore. 

Letters in response to this piece can be sent to sudhir@jom.media. All will be considered for publication on our “Letters to the editor” page.

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