Deadweight Loss of Gift-Giving

22 Pages Posted: 21 Oct 2003  

H. Kristl Davison

University of Hartford

Mark Bing

University of Tennessee, Chattanooga - Department of Psychology

Leila J. Pratt

University of Tennessee, Chattanooga

E. Bruce Hutchinson

University of Tennessee, Chattanooga

Date Written: August 29, 2003

Abstract

When giving a gift, 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 examines the issue of the deadweight loss of gift-giving. In particular it attempts to resolve and clarify 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). To accomplish this, the deadweight loss of gift-giving is estimated based on data collected from a survey of undergraduate students at the University of Tennessee at Chattanooga.

JEL Classification: A2, D11

Suggested Citation

Davison, H. Kristl and Bing, Mark and Pratt, Leila J. and Hutchinson, E. Bruce, Deadweight Loss of Gift-Giving (August 29, 2003). Available at SSRN: https://ssrn.com/abstract=442600

H. Kristl Davison (Contact Author)

University of Hartford ( email )

West Hartford, CT 06117-1599
860-768-4045 (Phone)

Mark Bing

University of Tennessee, Chattanooga - Department of Psychology ( email )

Department of Philosophy & Religion (#2753)
Chattanooga, TN 37403-2598

Leila J. Pratt

University of Tennessee, Chattanooga ( email )

Department of Philosophy & Religion (#2753)
Chattanooga, TN 37403-2598
423-744-4138 (Phone)
423-425-2385 (Fax)

E. Bruce Hutchinson

University of Tennessee, Chattanooga ( email )

Department of Philosophy & Religion (#2753)
Chattanooga, TN 37403-2598
423-755-4180 (Phone)
423-425-2385 (Fax)

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