Skip to main content Accessibility help
×
Home

Money or in-kind gift? Evidence from red packets in China

  • Marek Hudik (a1) and Eddy S. Fang (a2)

Abstract

In Western societies, in-kind gifts are generally more common than money gifts. However, exchange of in-kind gifts potentially involves inefficiency. Several models have been suggested to explain the in-kind gift-giving practice as a rational behaviour under certain assumptions about givers’ preferences and information and/or technological constraints. Unlike many Western societies, China has a long tradition of money gift-giving. So-called red packets are commonly exchanged. We argue that models developed to rationalise Western norms of gift-giving cannot fully account for Chinese gift-giving practices, and some Chinese practices even contradict existing theories. We collect Chinese household data through two surveys to establish stylised facts about gift-giving. We find that money gifts are commonly appropriate, depending on the occasion and relationship between givers and receivers. Moreover, for every occasion and relationship, money is more appropriate than gift vouchers. Finally, unlike studies focusing on Western gift-giving, our study finds no evidence that givers need to compensate receivers with higher value when giving money gifts rather than in-kind gifts. Our results are consistent with the view that the acceptability of money vis-à-vis in-kind gifts is governed primarily by social convention rather than information and technological constraints or the specific preferences of givers.

Copyright

Corresponding author

*Corresponding author. Email: marek.hudik@gmail.com

References

Hide All
Bicchieri, C. (2017), Norms in the Wild: How to Diagnose, Measure, and Change Social Norms, New York: Oxford University Press.
Burke, M. A. and Young, H. P. (2011), ‘Social Norms’, in Benhabib, J., Bisin, A. and Jackson, M. O. (eds), Handbook of Social Economics, vol. 1, North-Holland: Elsevier, pp. 311–38.
Camerer, C. (1988), ‘Gifts as Economic Signals and Social Symbols’, American Journal of Sociology, 94: S180214.
Caplow, T. (1982), ‘Christmas Gifts and Kin Networks’, American Sociological Review, 47(3): 383392.
David, P. A. (1994), ‘Why are Institutions the “Carriers of History”? Path Dependence and the Evolution of Conventions, Organizations and Institutions’, Structural Change and Economic Dynamics, 5(2): 205220.
Elder-Vass, D. (2019), ‘Defining the Gift’, Journal of Institutional Economics, available at https://www.cambridge.org/core/journals/journal-of-institutional-economics/article/defining-the-gift/9C72EA999F8879E8B43921FC36C9037A (accessed 11 April 2019).
Flynn, F. J. and Adams, G. S. (2009), ‘Money Can't Buy Love: Asymmetric Beliefs about Gift Price and Feelings of Appreciation’, Journal of Experimental Social Psychology, 45(2): 404409.
Greif, A. and Laitin, D. D. (2004), ‘A Theory of Endogenous Institutional Change’, American Political Science Review, 98(4): 633652.
Heikkila, E. J. (2011), ‘An Information Perspective on Path Dependence’, Journal of Institutional Economics, 7(1): 2345.
Henrich, J., Boyd, R., Bowles, S., Camerer, C., Fehr, E. and Gintis, H. (eds) (2004), Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-scale Societies, New York: Oxford University Press.
Herrmann-Pillath, C., Feng, X. and Guo, M. (2019), ‘Entrepreneurs and Ritual in China's Economic Culture’, Journal of Institutional Economics, pp. 115, available at https://www.researchgate.net/publication/332972491_Entrepreneurs_and_ritual_in_China's_economic_culture (accessed 11 April 2019).
Ikels, C. (2004), Filial Piety: Practice and Discourse in Contemporary East Asia, Redwood, CA: Stanford University Press, Redwood.
Kaplan, T. and Ruffle, B. (2009), ‘In Search of Welfare-improving Gifts’, European Economic Review, 53(4): 445–60.
Kipnis, A. B. (1996), ‘The Language of Gifts: Managing Guanxi in a North China Village’, Modern China, 22(3): 285314.
Leeson, P. T. (2019), ‘Logic is a Harsh Mistress: Welfare Economics for Economists’, Journal of Institutional Economics, pp. 16, available at https://www.cambridge.org/core/journals/journal-of-institutional-economics/article/logic-is-a-harsh-mistress-welfare-economics-for-economists/377AAD4CE3AE2176FBAF67221D08B7EF (accessed 11 April 2019).
Mankiw, N. G. (2018). Principles of Economics, Boston, MA: Cengage Learning.
Mortelmans, D. and Sinardet, D. (2004), ‘Reflecting Culture and Society? Norms and Rules Governing Gift-giving Practices’, The Netherlands’ Journal of Social Sciences, 40(2): 176201.
North, D. C. (1990), Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
Posner, E. A. (1997), ‘Altruism, Status, and Trust in the Law of Gifts and Gratuitous Promises’, Wisconsin Law Review, 567.
Prendergast, C. and Stole, L. (2001), ‘The Non-monetary Nature of Gifts’, European Economic Review, 45(10): 17931810.
Principe, K. E. and Eisenhauer, J. G. (2009), ‘Gift-giving and Deadweight Loss’, Journal of Behavioral and Experimental Economics, 38(2): 215220.
Robben, H. S. J. and Verhallen, T. M. M. (1994), ‘Behavioral Costs as Determinants of Cost Perception and Preference Formation for Gifts to Receive and Gifts to Give’, Journal of Economic Psychology, 15(2): 333350.
Ruan, J. (2017), ‘Guanxi and Social Capital’, in Guanxi, Social Capital and School Choice in China, Palgrave Studies on Chinese Education in Global Perspective, Cham: Palgrave Macmillan, pp. 3773.
Siu, K. W. M. (2001), ‘Red Packet: A Traditional Object in the Modern World’, Journal of Popular Culture, 35(3): 103125.
Smart, A. (1993), ‘Gifts, Bribes, and Guanxi: A Reconsideration of Bourdieu's Social Capital’, Cultural Anthropology, 8(3): 388408.
Smith, N., Sabat, I., Martinez, L., Weaver, K. and Xu, S. (2015), ‘A Convenient Solution: Using MTurk to Sample from Hard-To-Reach Populations’, Industrial and Organizational Psychology, 8(2): 220228.
Tremblay, C. H. and Tremblay, V. J. (1995), ‘Children and the Economics of Christmas Gift-giving’, Applied Economics Letters, 2(9): 295297.
Waldfogel, J. (1993), ‘The Deadweight Loss of Christmas’, American Economic Review, 83(5): 13281336.
Waldfogel, J. (2002), ‘Gifts, Cash, and Stigma’, Economic Inquiry, 40(3): 415427.
Webley, P. and Wilson, R. (1989), ‘Social Relationships and the Unacceptability of Money as a Gift’, Journal of Social Psychology, 129(1): 8591.
Webley, P., Lea, S. E. G. and Portalska, R. (1983), ‘The Unacceptability of Money as a Gift’, Journal of Economic Psychology, 4(3): 223238.
Woo, S., Keith, M. and Thornton, M. (2015), ‘Amazon Mechanical Turk for Industrial and Organizational Psychology: Advantages, Challenges, and Practical Recommendations’, Industrial and Organizational Psychology, 8(2): 171179.
Wu, Z. and Ma, S. (2017), ‘Money as a Social Currency to Manage Group Dynamics: Red Packet Gifting in Chinese Online Communities’, Proceedings of the 2017 CHI Conference Extended Abstracts on Human Factors in Computing Systems, 6–11 May, Denver, pp. 2240–2247.
Yan, Y. (1996), The Flow of Gifts: Reciprocity and Social Networks in a Chinese Village, Redwood: Stanford University Press.
Young, H. P. (1996), ‘The Economics of Convention’, Journal of Economic Perspectives, 10(2): 105–22.
Zelizer, V. A. (1994), The Social Meaning of Money: Pin Money, Paycheck, Poor Relief, and Other Currencies, New York: Basic Books.

Keywords

Money or in-kind gift? Evidence from red packets in China

  • Marek Hudik (a1) and Eddy S. Fang (a2)

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed