How to Look Good on Christmas and Spend Less

Someone asked here if there was any way to take advantage of people's cognitive biases so that one could seem generous while not actually spending a lot of money. The good news is that the answer is yes you can!.

Here's a very simple example. If you give someone a $50 scarf, this will seem more generous than giving them a $100 coat. Why? Because scarves, in general, are cheap, and therefore a $50 scarf is an extravagant gift. Good coats, on the other hand, are usually much more than $100, so your gift recipient will think of your gift as cheap. So save yourself the $50 and buy the scarf.

The general rule of thumb is this: buy expensive versions of cheap objects, and people will consider the gift very generous. How does this work? Why isn't the gift recipient annoyed that you spent less? The key is that the gift recipient does not understand all of the gift options you compared. When I go shopping, I compare the $50 scarf with the $100 coat and decide what to give to you. I realize that the coat is worth more - it's a bigger sacrifice for me to buy it, and thus on most levels is a more valuable gift. However, you don't know that I considered buying a $100 coat, all you see is the $50 scarf.

Without the ability to see my whole set of gift options, you have to evaluate the gift based solely on its own merits. So you open the box and say, "Hey, look at that, a really nice expensive scarf! Wow, what a great gift," because you just compare this scarf to your idea of scarves in general, and not to the whole class of possible gifts.

Note that this probably doesn't work as well with kids, because they have an inexhaustible reference list of gifts to compare too. Their reaction is likely, "Hey, look at that, a really nice expensive pair of Dora underwear! How come I didn't get a pony?" You'll just have to wait til they grow up, and then feel free to screw them every holiday with expensive cheap stuff.