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Forced gifts: The burden of being a friend

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  • Bulte, Erwin
  • Wang, Ruixin
  • Zhang, Xiaobo

Abstract

In many developing countries, gift expenses account for a substantial share of total household expenditures. As incomes rise, gift expenses are escalating in several developing countries. We develop a theoretical model to demonstrate how (unequal) income growth may trigger “gift competition†and drive up the financial burden associated with gift exchange. We use unique census-type panel data from rural China to test our model predictions and demonstrate that (1) the value of gifts responds to the average gift in the community, (2) the escalation of gift giving may have adverse welfare implications (especially for the poor), and (3) escalating gift expenses crowd out expenditures on other consumption items.

Suggested Citation

  • Bulte, Erwin & Wang, Ruixin & Zhang, Xiaobo, 2017. "Forced gifts: The burden of being a friend," IFPRI discussion papers 1615, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:1615
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    2. Yi-Bin Chiu & Zhen Wang & Xu Ye, 2023. "Household gift-giving consumption and subjective well-being: evidence from rural China," Review of Economics of the Household, Springer, vol. 21(4), pages 1453-1472, December.
    3. Daum-Avital, Liora & Azar, Ofer H., 2023. "Courtesy versus efficiency: Personal gifts and monetary gifts – Preferences and norms in Israeli society," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 104(C).

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    More about this item

    Keywords

    CHINA; EAST ASIA; ASIA; household expenditure; developing countries; income; rural communities; welfare; gift competition; reciprocity; subjective well-being; inequality; O10 Economic Development: General; I30 Welfare; Well-Being; and Poverty: General; D10 Household Behavior: General;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • D1 - Microeconomics - - Household Behavior

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