How to Give Better Holiday Gifts

Use these practical tips to give better holiday gifts this year. You’ll be happy to know that a bigger price tag doesn’t necessarily mean a happier recipient!

It may be better to give than to receive, but that doesn’t make picking out holiday presents for your family and friends any easier. Even with all the festive cheer that the season brings, it can be stressful to shop for the perfect gift for everyone on your list if you’re worried the folks you hold near and dear won’t be delighted by what they find under the tree.

With gift givers spending more than ever, that pressure is mounting. In 2024, U.S. consumers dropped a record $994 billion on holiday shopping, according to the National Retail Federation, and projections by the Mastercard Economic Institute suggest holiday sales will continue to climb this year, by an estimated 3.6%. Higher-income shoppers, buoyed by a surging stock market, are likely to spend even more.

Shelling out bigger bucks, though, doesn’t necessarily yield better gifts for the people you love. The NRF says holiday returns last year were 17% higher than average, suggesting a growing number of presents are missing the mark, putting added pressure on gift givers this year.

“We give gifts because we want to make people happy, give them something they’ll enjoy and signal we care about them,” says Elanor Williams, an associate professor of marketing at Washington University and a leading gifting researcher. “And therefore we stress about it.”

How can you reduce that anxiety and land on gifts the people you care about will love? Science can help. A growing body of research from behavioral finance experts identifies the kinds of presents that people typically like best and the mental quirks that prevent many people from buying them.

Understanding these preferences and the cognitive traps that lead gift givers astray can help ensure your holiday presents not only stand out when they’re unwrapped but also stand the test of time.

Ideas for better holiday gifts

These are the strategies that leading researchers in the field suggest.

Skip the razzle-dazzle

Have you ever splurged on gifts for your family that made them exclaim in delight upon opening, only to never see the items used or played with again? You may have fallen victim to the smile-seeking hypothesis.

Coined by researchers at the National University of Singapore and the University of Chicago Booth School of Business, the term refers to the tendency of gift givers to focus on eliciting the biggest reaction at the time a present is opened — a big smile or expression of awe — rather than on whether the item will bring your recipient long-term satisfaction when he or she actually uses it in the future.

The researchers ran several experiments to test the hypothesis, including one in which they randomly assigned participants to give or receive one of two similarly priced mug sets as a wedding present: an award-winning ergonomic set or a personalized set with inscriptions of the couple’s names and wedding date. Gift givers favored the more personal mugs and predicted the newlyweds would have a more positive reaction to them when opened and like them more over the long term, too. In reality, the recipients preferred the more useful mugs, both at the moment of unwrapping and for use over time.

“There’s so much pageantry that goes along with exchanging gifts, especially at Christmas,” says Williams. “It really gets you focused on that moment where you’re going to hand that gift over and see what the person says when they open it.”

What to do instead? Rather than try to wow loved ones when you give them a holiday gift, focus on whether your kids, grandkids and dear Uncle Bill really need the item and will use it and like it in the days and weeks to come. Research shows, says Cindy Chan, an associate professor of marketing at the University of Toronto, that recipients are often just as happy, if not happier, to open practical gifts as they are showstoppers, valuing a seemingly boring gift more because they get more use out of it.

“For my parents and their stockings one Christmas, I just threw in some kitchen utensils,” Chan says. “I noticed that their kitchen tongs were really annoying, that their ladle was starting to crack. They use them every day, and they appreciate that gift.”

Give them what they want

One of the simplest ways to get everyone on your list something they will enjoy is to put yourself in their shoes, says Mary Steffel, associate professor of marketing at Northeastern University who has published multiple research papers on the psychology of gift giving. “Try to think about what that person might choose for themselves, and let that help guide your decision,” Steffel says. “That’s more likely to keep our focus on the recipient’s preferences as opposed to other motives, like our desire to feel thoughtful.”

The easiest way to do this? Buy something from your recipients’ wish list. Studies suggest your loved ones will appreciate that gift more than an unsolicited surprise offering and consider it more thoughtful, even if it doesn’t feel that way to you.

That was the conclusion of a study out of Harvard Business School and Stanford University’s Graduate School of Business. In one experiment, the researchers gave gifters the option to pick a present from their recipient’s Amazon wish list or choose one on their own. People were more satisfied when they received gifts from their list — just as, in other experiments, they preferred to get wedding gifts from their registry and birthday gifts they had explicitly requested.

Still, gifters love to go rogue. Why the disconnect? The researchers concluded that people giving presents mistakenly believe it makes them look more considerate when they think up gift ideas for someone on their own, though the opposite is true.

“We want to feel thoughtful. We want to communicate, I want to show you how well I know you,” says Julian Givi, associate professor of marketing at West Virginia University and a leading gifting researcher. In reality, he says, these are unconsciously selfish motivations because they don’t put what the recipient really wants first.

Don’t get too personal

You may think that a highly personal gift will signal how well you know the unique tastes and preferences of your friends and relatives. But a series of studies spearheaded by Northeastern University’s Steffel and Washington University’s Williams show how these kinds of presents can backfire.

In one experiment, the researchers randomly assigned participants to imagine that they were either giving a gift to a close friend or receiving one from that pal. They were then presented with two gift options: a Visa gift card that could be used anywhere or a gift card from the recipient’s favorite clothing store. As it turned out, givers were far more likely to choose a gift card to the recipient’s favorite store, but the people getting the present preferred the more versatile Visa gift card.

Steffel and Williams’ research also finds that you are more likely to choose a personalized, less versatile gift for someone you’re close to – say, a child or sibling – than people with whom you have a more distant relationship because you think it signals how well you know the recipient. Ironically, you could be giving the people you love worse presents than your acquaintances.

Buying your daughter a gift card to a store you know she’s purchased clothes from before shows you are paying attention, but it doesn’t take into account all the other facets of her personality, Steffel says. Clothes might not be first on her wish list.

“Givers tend to pick something that is representative of who their recipient is,” she says. “Recipients are more likely to focus on what they want or need right now, so gravitate toward a gift that’s more flexible.”

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Alicia Adamczyk is a contributing writer at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.

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