Daniel Gross thinks gift cards are imposing, inefficient, and insulting gifts -- imposing because they induce you to spend more than the face value of the gift card, inefficient because they tie up money you could be earning interest on, and insulting because they imply the recipient is unable to decide where to spend her money herself.
It sounds right that gift card holders tend to (irrationally) treat their gift cards as different from cash, but that doesn't necessarily make them an imposition. It seems to me that the indulgence that goes along with spending a gift card is a big part of the gift -- it gives you permission to buy something you wouldn't normally buy, and to the extent that it gets you to spend more than the value of the gift card, couldn't that even be a good thing?
As far as the charge that cards are poor investment instruments, you'll hear no argument from me -- I always try to spend them as soon as possible for precisely this reason. But there's also a way in which gift cards are much more efficient. If you don't know the person well enough to buy them exactly the gift they themselves would buy (and you don't, if you're giving them a gift card), then the gifts you choose will be inefficent -- they won't reflect the recipient's preferences perfectly. In this sense gift cards are more efficient, since nobody knows what someone wants better than she herself.
While I do see how gift cards could be a mechanism for taste-baiting and general passive aggression, I'm pretty sure that in capable hands, any gift could be the same. And anyway, doesn't a gift card kind of imply that you thinmk the recipient has good enough taste to pick her own gift? In general, I feel awfully uncomfortable buying books for a book lover, unless I have either a very strong feeling about the book or a very strong belief that my taste is better than hers!
So I guess I think gift cards are ok, at least from the perspective of the giver and the recipient. I don't particularly like the fact that large corporations are getting an interest-free loan, or even that we give gifts at all for the holidays (although I remembered after writing this post that giving to kids is a totally different and usually selfless calculus), but seeing as how these things are unlikely to change, giftcards seem harmless enough.
MORE: A quick question. If companies offering gift cards are in effect getting an interest free loan, shouldn't market forces lead them to sell gift cards that have a higher face value than what you pay for them at the outset? Why couldn't retailers sell a card, one that can't be used for some term (say, before a certain holiday), but give the redeemer a premium? I guess with interest rates as low as they are, it wouldn't be a meaningful amount, but it would certainly get attention.
(By the redeemer, I do not mean Christ. This premium would be available to sinners as well!)
EVEN MORE: Will Baude points out that having unread books on one's shelf is also a sort of interest-free loan to the bookstore, or the publisher, or the author. For me this prompted a seriously disturbing realization: I must be single-handedly keeping the whole industry afloat!
I think you're right, Paul - gift cards are a form of interest-free loan (perhaps a "certficate of deposit" of sorts??) to the corporation for whom they represent an obligation. Perhaps because the gift-card concept is fairly new (although we've had gift certificates (and gifting modalities like hong bao) for a long time) few people think of the financial ramifications of "buying" future purchases on another's behalf. A very interesting subject.
Personally, I think (as you mentioned about gifts imperfectly reflecting recipient preference) gift cards' greatest psychological appeal is that they essentially let gift-givers "off the hook" and release them from the nagging fear that their carefully-chosen (or not) gift will end up the laughingstock of the recipient's holiday 'take', discarded, returned for cash, or heaven forbid, 're-gifted.'
Check out Will Baude's post for more on the interest-free loan business.
Also your comment reminds me that gift giving has this huge element of choice, and like other choices we face as post-modern consumers this can be a huge source of anxiety and neurosis. Another reason to hate the season, I guess. But still I have to say that personally I've always hated giving gift cards.
I think, the next time I might ponder giving a gift to someone, I may not try to find an item that I think will make someone uniquely happy but will glance over to the gift card on the Best Buy impulse buy rack and relieve my stress and charge a few $25 cards. Or maybe, I will increase the utility of the gift by giving cash; nice bills, crisp and clean. These, however I suppose, will be directed to the bank by the less indulgent forces that direct our spending. Now, I feel the gift, although of the highest utility to the recipient, will not provide the true pleasure that a gift should deliver. I may recede to the archaic practice and buy a real gift. The recipient could always return it for credit.
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