Forced gifts: The burden of being a friend

Download or read book Forced gifts: The burden of being a friend written by Bulte, Erwin and published by Intl Food Policy Res Inst. This book was released on 2017-03-09 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.