1. Gift giving is a common practice in many developing countries, but rising gift expenses can create financial hardship for households.
2. Generous gifts are seen as a sign of altruism or friendship and can also signal public-spiritedness and high status.
3. The process of escalating gift giving can have negative welfare implications for the poor, and the findings highlight the distributional consequences of rising levels of gift expenses.
The article "Forced gifts: the burden of being a friend" discusses the rising trend of gift giving in developing countries, particularly in rural areas where social networks are relied upon for coping with adverse shocks. The article argues that gift giving plays an important role in sharing risk, signaling friendship, and facilitating reciprocity. However, anecdotal evidence suggests that rising gift expenses are also creating hardship for people and may have reached the point where they become a burden on household budgets.
The article presents a simple model to explain escalating patterns of gift giving and studies its implications for welfare and inequality. It interprets generous gifts as a sign of altruism or friendship, which cement reciprocal relationships between specific individuals. Generous gifts can also be a signal of public-spiritedness to all members of the local community, translating into high status, which may be useful in the pursuit of private objectives.
The article provides data from rural China to support its theory of gift giving as a competitive and inequality-enhancing process. It argues that the poor are made worse off by this process. The article contributes to several strands of literature including informal insurance and risk sharing, status races involving negative externalities, and impure altruism.
While the article provides interesting insights into the phenomenon of rising gift expenses in developing countries, it has some potential biases and missing points of consideration. Firstly, it focuses mainly on rural China without exploring other developing countries where similar trends may exist. Secondly, it assumes that gift giving is always a competitive process driven by status-seeking behavior rather than genuine altruism or cultural norms. Thirdly, it does not consider how gender roles may influence gift-giving practices or how power dynamics within social networks may affect who gives gifts to whom.
Furthermore, while the article notes that rising gift expenses can create hardship for people and lead them to engage in risky behavior such as selling blood to finance gifts, it does not explore potential risks associated with excessive gift giving such as indebtedness, social exclusion, or even violence. It also does not present counterarguments to its theory of gift giving as a competitive and inequality-enhancing process, such as the possibility that generous gifts may be motivated by genuine affection or gratitude rather than status-seeking behavior.
In conclusion, while the article provides interesting insights into the phenomenon of rising gift expenses in developing countries and its implications for welfare and inequality, it has some potential biases and missing points of consideration that should be taken into account when interpreting its findings.