The purpose of this entry is trying to establish a relation between what we studied in chapter 2 about markets and morals and the signaling model of gift giving briefly explained in chapter 6.
To begin with, as it’s explained in chapter 6, it’s been usually thought in economics that gift-giving is normally inefficient, since by definition, consumption choices are made by someone else different from the final consumer. Such a situation naturally can arise consequences such as making a choice of gift that could be valued less than its cost by the receiver, thus implying that a deadweight loss exists in the transaction.
According to a paper written by Joel Waldfogel in 1993 which estimates the deadweight loss generated in the US during Christmas time, almost one tenth to one third of the value of gifts is destroyed every year due to gift-giving. It’s also mentioned in his research that the most efficient solution, as expected, is to give cash instead of things. Such a solution seems straight-forward at least in the classical economic thought context but since humans are far from being just rational agents who only care about themselves and their utility, it’s important to consider which implications does this alternative have if there exist any. We learned in chapter 2 that one of the desirable moral relations between markets is that of trust. The more trust between agents, the more the markets will function better for a variety of reasons already studied in chapter 2. To address this situation in the context of gift-giving, two examples of different practices in which gift giving is not subject to economic scrutiny are presented.
Wendy James, a British anthropologist and academic wrote a paper in 1970 for the journal “Sudan Notes and Records” in which she describes the function gift giving achieves in a north east African tribe called the Uduk. James observed that when animals or grain were given as a gift from one clan to another, they had to be eaten rather than invested to make one selves richer, since that would look as if they would be getting rich at someone else’s expense. By this practice, the Uduk separated gifts from capital and thus preserved the special distinction between them, possibly meaning that the value of the act itself of giving a gift represents much more than just a matter of giving goods out for free.
Another example is brought in by Marcel Mauss, a French sociologist and anthropologist and one of the most influential thinkers of gift giving. He gives an example of a practice in which huge amounts of wealth are destroyed, the Potlach; common practice among the native people of the pacific Northwest. The objective of this celebration was to stablish the social status of a determined group or family and it consisted of a big feast in which the family would give out or even destroy huge amounts of food, blankets, animal skins, ornaments and other objects. Afterwards, the invitees of the Potlach were obligated to host an even bigger feast and give away even bigger quantities of presents to their guests. In addition to this ritual, every present received at a potlach must be returned at another potlach because otherwise, people who wouldn’t return them would be considered as not paying their debts.
As seen in this examples, gift giving is far more than just a transaction and much more of an activity which makes ties between people leading to strong bounds between members of a society. Perhaps the most remarkable point in the analysis of gift giving is the difference in the objectives which market transactions and gift giving achieve. As Lewis Hyde, an essayist author of the book “The Gift” explains, in market transactions the objective is to achieve a settlement in which both parties depart as equals after the transaction. In gift giving happens the opposite, the idea is that one party breaks this balance by making both parties unequal but simultaneously, a relationship of trust is born or becomes stronger.
Rogelio Antonio Melo Juárez