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Confounding Issues in the Deadweight Loss of Gift-Giving


  • H. Kristl Davison
  • Mark N. Bing
  • E. Bruce Hutchinson
  • Leila J. Pratt


When a gift is given, someone other than the final consumer makes the consumption choice. Thus there is a possibility that the gift will not match the preferences of the receiver, i.e., the gift will represent a wise use of the money given the gift-giver's tastes but not necessarily a wise use of money given the recipient's tastes. In other words, gift giving can result in a deadweight loss. This paper addresses and clarifies the discrepancy between Waldfogel's (1993) finding of a deadweight loss from gift giving and Solnick and Hemenway's (1996) finding of a deadweight gain from gift giving. It also builds on some of the concerns raised by Ruffle and Tykocinski (2000).

Suggested Citation

  • H. Kristl Davison & Mark N. Bing & E. Bruce Hutchinson & Leila J. Pratt, . "Confounding Issues in the Deadweight Loss of Gift-Giving," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center.
  • Handle: RePEc:mts:jrnlee:200801

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    References listed on IDEAS

    1. Waldfogel, Joel, 1993. "The Deadweight Loss of Christmas," American Economic Review, American Economic Association, vol. 83(5), pages 1328-1336, December.
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    More about this item

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory


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