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Forced gifts: The burden of being a friend

Erwin Bulte (), Ruixin Wang and Xiaobo Zhang ()

Journal of Economic Behavior & Organization, 2018, vol. 155, issue C, 79-98

Abstract: In many developing countries, gift expenses escalate with income growth and account for a substantial share of household expenditure. 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.

Keywords: Gift Competition; Reciprocity; Subjective well-being; Inequality (search for similar items in EconPapers)
JEL-codes: O1 I3 D1 (search for similar items in EconPapers)
Date: 2018
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