In my last post I wondered how many millions of dollars are essentially donated to corporations from unredeemed gift cards. It turns out it’s not millions, but billions: $41 billion from 2005-2011 according to this 2011 WSJ article: http://blogs.wsj.com/economics/2011/12/24/number-of-the-week-billions-in-gift-cards-go-unspent/

Gift cards continue to grow in popularity, and the irony is that while cash seems like a thoughtless gift, it’s obviously much more useful. With cash, you have a currency that you can exchange anywhere, for anything. With a gift card, you are limited to Applebee’s, and odds are you’ll go there once, spend fifteen dollars, and then forget about the ten-dollar remainder (i.e. $10 donation to Applebee’s).

So why isn’t cash the better gift?

Christmas morning:

(Unwraps $25 cash)
“Gee, guess I’ll buy some gas. You really went out of your way huh?”

(Unwraps $25 gift card to Outback Steakhouse)
“No way!! BLOOMIN’ ONION HERE I COME, this is the best thing EVER!!”
(breaks into Outback theme song)
“Let’s go outback toniiiight!! Life will still be there tomorrow (or is it “like we’ll still be there tomorrow)!”
(starts break-dancing)

Outback commercial here for lyric review: http://www.youtube.com/watch?v=0Mvm6KfJDE0

You could have gone to Outback with the same $25 cash, but the cash feels crummy. Why? Maybe it’s that cash is just practical, and you feel like you should buy gas with it. Or maybe it goes back to decision fatigue (from the Barry Schwartz Ted Talk). When you receive cash, you still have work to do, because now you have a decision to make, and you have to choose from an infinite number of options (you could even choose to invest it). Even once you decide, you may feel decision regret – with an infinite number of options, surely there was a better purchase you could have made. Gift cards do the work for you, and eliminate any possible regrets:
“Here you go, you HAVE to eat here, even if you don’t like the food. I’ve made your choice for you.”
“Perfect! I don’t like decisions!”
“Nobody does.”
“But what if I lose the card?”
“It doesn’t matter, it’s not real money.”
“Thank you Santa!”
“You’re welcome.”