Liquidity Premium

Some years ago, when an ex-colleague from Anyhow Insure Anything got married, our manager gave her $60 for the wedding dinner, which was held at Raffles Hotel.  At that time, the table price for Raffles Hotel was about $900+… and most of us gave her $100 to ensure that she didn’t lose money.

What’s worse was our manager, in what I assume was a display of pure ignorance of "market price" passed a comment to her the following week when she returned to work… he said, "Wah… must have made money from your wedding right?"

When my ex-colleague heard that, she wanted to roll her eyes and say, "If everyone gave the amount you gave, I would be bankrupt".  But she bit her tongue of course… and complained to us instead.

That was in 2002.

Recently, I’ve been similarly alarmed at how ignorant (I choose to believe it’s ignorance rather than stinginess) some guests at Chinese weddings can be.  Take Iceman’s ex-colleague for example.  She told Iceman that she gives a standard $88 for weddings she attends, regardless of where it may be held.  So if you invite her to your wedding at Shangri La for example, woe onto you because that would have been a loss of about $40 for you.  Just imagine… if you had 300 guests and they all gave $88, that’s a write-off of $12,000!  That is as serious as a sub-prime loss to me! 

Even more recently, a good friend of Booze Queen’s got married and when they were counting the angbaos after the dinner, they noted that some of the groom’s friends gave $60!  $60 again??  Gosh… if you talk about time value of money… if $60 in 2002 was bad, $60 in 2008 is disgusting!  Hey, there’s a huge liquidity premium nowadays all right!

Frankly, I think Iceman’s method of giving angbao is the most practical – he does a quick check of the hotel’s banquet price on the website (most have prices available) and he gives an angbao accordingly. 

For me, I take the lazier approach – $80 for people that I’m not close to, $100 for average friends and $120 to $160 for close friends.  I guess you could say I translate the extent of my well-wishes into a certain dollar value, measured by how close I am to that person.

At the end of the day, I don’t think any soon-to-be-married couple plan their wedding dinner around how much profit they can make.  If dollars and cents were all they were thinking about, then they would choose the cheapest possible venue with total disregard for factors like good food, service, ambience, etc.  That said, I’m not saying that guests who give an amount below market rate should be condemned to wedding dinner hell.

Be a cheerful giver… but don’t build your happiness on someone else’s pain.

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July 2008