Rather like a Christmas Club, the wedding phenomenon has two stages. The couple getting married gives bridal gifts to friends and family. Then when they tie the knot, they get it all back.
So, more than etiquette, choosing the right wedding gift is an economic decision. But how much to give?
The Economics of Wedding Gifts
Economists who have pondered wedding gifts list several issues.
Stick to the registry?
Yes. To get the full value of a present, the recipient’s pleasure should equal the giver’s cost. When the value of the gift to the recipient is less than the price the giver paid, we wind up with what economists call deadweight loss. To minimize deadweight loss, we need to give precisely what has been requested.
Also though, expectations come into play. Society has created a Goldilocks scenario where there is too little (people get angry), too much (people get uncomfortable) and the just right amount to spend.
Looking at typical spending on wedding gifts, we could say that these are the norms:
Sometimes, as in this Curb Your Enthusiasm excerpt, it is impossible to get it right:
Our Bottom Line: Thinking at the Margin
Because wedding gifts are always about how much more or less to spend, they require thinking at the margin. That imaginary line where we make decisions about how much extra, the margin relates to a firm’s earnings (profit margins), a sports score (margin of victory) and well-being (margin of safety).
With a wedding present, if you ponder how much more or less to spend, then you too are thinking at the margin.
At this point an economist might continue with diminishing marginal utility (a bigger gift could generate less extra pleasure) or the marginal rate of substitution (your internal exchange rate between the pain and joy of giving) but let’s save that for another day.
My sources and more: Always good for an economic lens, the BBC’s “More or Less” podcast provided a whole new way to look at wedding gift giving. But then for some extra (at the margin) economic analysis (and maybe advice also) I recommend articles here, here, and here.