Gifts, Cash, and Stigma

31 Pages Posted: 23 Jul 2001

See all articles by Joel Waldfogel

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management; National Bureau of Economic Research (NBER); University of Minnesota - Twin Cities - Department of Economics

Date Written: June 6, 2001

Abstract

Each year individuals in the U.S. transfer between $50 and $72 billion in resources to friends and family members in the form of noncash holiday gifts, despite the fact that holiday gift recipients apparently value their noncash gifts at about ten percent less than the prices paid by the givers. Using a new data set on 2400 holiday gifts, we document that cash giving is more likely from givers who tend to give unwanted gifts, indicating that givers are concerned with the utility of their recipients and, in turn, that the decision to give cash is economic. While cash gifts are more likely from less efficient noncash gift givers, they are nevertheless surprisingly rare. The rarity of cash gifts can be rationalized by a stigma of cash giving that we are able to parameterize and estimate using a simple structural model. We estimate that givers behave as if the stigma were roughly $3, plus half the cost of amount allocated to giving.

Keywords: gift giving, inter vivos transfers

JEL Classification: D61, D11

Suggested Citation

Waldfogel, Joel, Gifts, Cash, and Stigma (June 6, 2001). Available at SSRN: https://ssrn.com/abstract=276081 or http://dx.doi.org/10.2139/ssrn.276081

Joel Waldfogel (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

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