The story goes that an economist was studying the deadweight loss of gift-giving. In a nutshell, gift givers pay more for gifts than the recipient would pay for themself. When he originally presented his study, he recommended gift cards as a gift with no deadweight loss.

Realizing that gift cards can be kind of cold, he later recommended donations in the recipient’s name as having more warmth and no deadweight loss. Donating to charity is what everyone says they would do if they could afford it, and many people actually do do when they can, and it feels great. The giver, receiver, and charity all get significant satisfaction.

I tried this with my girlfriend for her birthday and she absolutely loved it. The key, of course, is to make it a charity they would like (or leave it up to them). In my girlfriend’s case, she’s an animal lover and has adopted a shelter cat, so I cruised http://www.charitynavigator.org/ for the best animal charity, and gave her the check to mail in to Actors And Others For Animals.

Even if the recipient isn’t terribly well off, don’t write off the donation. Proportionally, the poor give more to charity than the rich. Again, It’ll all hang on which charity. That’s your chance to show how well you know them.

Alas, I’m certain that, despite my gentle hints and apparent needs, I’ll be getting a thimble collection, stuffed toys, candles and other items that will only end up at the consignment shop where I’ll gratefully walk away with a few dollars.

I like PawPrint’s idea about calling to ask if this is a good time for the gift recipient to cash in on the coupons–whenever I’ve given those, no one has ever cashed them in, but with a little prodding, they might have.

I think underwear, socks, shoes, PJs and the like are okay IF the person receiving appreciates practical things and the item is of a nicer brand than the person would ordinarily buy (those things need to be kind of fancy). If it seems like those things are true needs, but the giver is afraid of being insulting, I’d say a gift certificate to WalMart or Target might allow the person to make his own choice.

You really need to think about the recipient when you give “frugal” gifts. I know for myself, there was a time years ago when money was tight but I was able to pay all my bills and feed myself. The things that I missed were not the groceries or the help with the chores. I missed being able to go get a pedicure. I missed going to my favorite salon and getting my hair done. I missed being able to buy a pair of trendy but impractical shoes for the spring. I missed being able to go see a movie (much less a movie for a date at full price instead of a 2 p.m. on Saturday matinee).

For a lot of people, buying them food or paying their bills or buying them undies is insulting, as well as not being much of a gift. I always appreciated the people in my life who gave me things that I *wanted* (not crap to clutter my house) but didn’t make me feel like I was accepting charity. A gift certificate for a pedicure costs $25 or so in most cities. A gift certificate for 2 movie tickets is about the same. Heck, even a bottle of wine (something I wouldn’t have spent money on when I was on a tight budget) is a great gift. Something consumable that can be enjoyed with a friend.

OTOH, the CSA would be a much appreciated gift, since I love to cook and love to try new foods.

So again .. please take into account what your RECIPIENT wants and not just what you think is a good gift. Giving a gift should be about the receiver, not the giver.

This year, I’m painting a house for a relative while my husband is overhauling her car. She’s elderly and alone. These gifts will mean much more to her than trinkets she has no room to display.

I’m sure it works for some people, though, and as others have said, it’s all about knowing your recipient.

Love the CSA idea for people who like to cook.

1. Magazine subscriptions. I cut them all out of my budget and so getting one as a gift feels like such a luxury. Plus you get something to look forward to each month and not just use up once. They are usually around $15-30.

2. A car emergency kit. My older sister gave one to me when I was in college. I would never have spent the money myself, but it was a lifesaver the first time I needed jumper cables. 12 years later that bag is still in my car trunk!

Gifts that I’ve given and gotten a good reception for:

1. Homemade jam. This does require some pre-thought since I do U-pick and make the jam in the summer. But by the time the holidays roll around, I can just reach in the cabinet and it’s ready to go.

2. A family recipe book. After my grandmother died, I digitized all her recipe cards and printed them into a book. I think that it averaged about $20 a book and at least 3 relatives cried when they opened it up. Definite success.

Heartily disagree on the entertainment book, though. I got one of those a couple of years ago and even though I go out to eat and travel a bit, I never remembered to use any of the coupons inside of it.

Many restaurants will offer 50% coupons online at sites like groupon, where you can buy a $50 gift card for $25. You could give the gift card, or you could buy the card and take the person out so that they have company if they are single or lonely. It’s a good way to go out and try new places.

The one time I gave a gift-of-time certificate the person didn’t take me up on it. Definitely figure out ahead of time whether a person would want the help.