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Why thoughtful gifts are the worst gifts

There's a reason Santa demands a list. (Matthew Apgar/AP Photo)
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In the coming weeks, millions of people will buy gifts for loved ones. Which is great -- except that tons of those people will make the same glaring mistake, and buy the wrong gift.

Roughly 10 percent of gifts are returned each year -- and the percentage of unwanted gifts is surely higher given that nice people may not want to return presents.

What's going on?

Gift buying has become a deceivingly selfish pursuit. We don't actually look for things people want to receive. Instead, and to many of our gifts' detriments, we tend to look for things that we want to give. It's a subtle, but pretty significant problem.

The research says so.

"Gift givers want to prove how well they know a person by choosing a thoughtful gift," Mary Steffel, an assistant professor at the University of Cincinnati whose research has focused on gift-giving. "But people aren't very good at anticipating what others want."

Research has shown that givers tend to value the gifts they buy considerably more than recipients. Gifts are valued roughly 10 to 33 percent less by recipients than what givers paid for them, Joel Waldfogel noted in Scroogenomics: Why You Shouldn't Buy Presents for the Holidays, his 2009 book on gift-giving.

The discrepancy seems to come from a simple misplaced belief that thoughtful presents are the best presents. They are not. In fact, they might just be the worst presents. The more thought you put into a present, the more likely you are to stray from buying what the person you're buying the present for actually wants.

"Gift givers tend to focus on what people are like instead of what people actually would like," said Steffel. "And it's most pronounced when they're shopping for people they are close to."

In other words, people let their gift-giving egos get in the way of great presents. Especially when the recipient is someone they want to show they know really well.

Fortunately, the answer to our collective insistence on guessing what people want is simple: stop it.

"People want whatever it is they they happen to want in the moment, which can be very specific," Steffel said. "You're much better off asking people what they want."

If that's too callous, or impersonal, there's another helpful rule of thumb. Instead of buying restrictive gifts, like gift cards for specific stores, buy gifts that allow for flexibility, like gift cards that can be used more broadly (or, better yet, cash). People tend to prefer gift cards to actual gifts, and cash to both, Steffel explained. Steffel's latest research, which focuses on gift card giving, points to exactly this point—that versatility is the key to better gift giving.

Steffel cited a specific example to show how a giver's thoughtfulness can miss the mark. Say you have a friend, and that friend really likes margaritas. You might think to buy that friend a margarita-maker.

But a margarita-maker, even if it speaks to a specific quality in that friend (in this case, an insatiable thirst for tequila), is actually a pretty terrible present. In virtually every scenario, a blender, or any other more versatile drink-maker, would be a far superior present. Better yet? Give the friend enough cash to buy the device, suggest it, and then accept the reality that they're probably going to buy something else they want much more.