Confounding Issues in the Deadweight Loss of Gift-Giving

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

Journal for Economic Educators

Abstract: 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).

JEL-codes: A2 D11 (search for similar items in EconPapers)
Date: 2008-03
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mts:jrnlee:200801

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