Gift Exchange

exactly – in general when “an economist looks at everyday life” (TM), when you come to a choice between two seemingly inconsistent alternatives, the thing to give up is expected utility theory.

I always thought that that “Deadweight Loss of Christmas” paper should’ve been entitled “Estimating the non-pecuniary value of Christmas” but I guess Waldfogel wanted to be provocative.

I’m not so sure it’s really reciprocity in a lot of cases. I don’t really care if my brother shaves his head for leukemia. Rather, it’s a guilt trip. The person decides to run laps or shaves their head or whatever and hits up all their friends and family, who feel obligated to donate because the person doing it is a friend or family member.

There’s no reason whatsoever that gift exchange shouldn’t involve guilt-tripping – indeed it often does. Hence, for example, those little stickers that charities often send you in the post – the economically rational thing would be to pocket ’em, use ’em and not give the charity one penny, but I suspect that few people actually do this – they either donate money, or guiltily chuck the things out. Or in slightly more academic language, Jon Elster (_The Cement of Society_, pages 111-112):

These norms [norms of reciprocity] enjoin us to return favours done by others. The potlatch system among the American Indians is a well-known instance. According to one (contested) interpretation the potlatch was something of a poisoned gift. ‘The property received by a man in a potlatch was no free and wanton gift. He was not at liberty to refuse it, even though accepting it obligated him to make a return at another potlatch not only of the original amount but of twice as much.’

Elster also quotes Colin Turnbull on the Ik of Uganda.

you have the odd phenomenon of these otherwise singularly self-interested people going out of their way to ‘help’ each other. In point of fact they are helping themselves and their help may very well be resented in the extreme, but it is done in such a way that it cannot be refused, for it has already been given. Someone, quite unaskedl may hoe another’s field in his absence, or rebuild his stockade, or join in the building of a house that could easily be done by the man and his wife alone. … The work done was a debt incurred. It was another reason for being wary of one’s neighbours.

Now this obviously isn’t what is happening here – there isn’t any established norm that because John is shaving his beard that everyone should donate, nor any practical way of monitoring who does or doesn’t contribute. He’s appealing not so much to people’s sense of guilt or specific relations of exchange as to their sense of _generalized_ reciprocity (which is what may be hanging up doug t and ebenezer); that if someone contributes something that is personally costly to the general good, others should do so too. But it does suggest that reciprocity under different conditions may indeed be used as a weapon. Which is one of the reasons that I’m suspicious of communitarians who fetishize reciprocity (as Etzioni did in his response to Kieran last week) – reciprocity doesn’t by any means exclude self interested behaviour. Under some circumstances, people may prefer to conduct exchange through cash, precisely so as not to incur poisonous obligations.

Why do social scientists outside of economics always want to call everything reciprocity?

Henry’s already beaten me to the punch, and done it better and more thoroughly than I would have… but I’d add that gift exchange gets so much play in social sciences because Mauss’ thesis is so damn seductive, and because the sheer pleasure of Mauss plus the unfalsifiability of psychological explanations can take you anywhere you want to go: it’s often said that psychology has nothing to say about society because it only deals with the individual – here’s a way to apply it in group context.

There’s a thing called “fun” which you economists might care to look up sometime.

Alex Tabarrok at Marginal Revolution talked about this topic a while back:

http://www.marginalrevolution.com/marginalrevolution/2006/07/a_young_economi.html

Economics = fun

Helen’s comment is accidently very funny. Economics is in fact good when explaining things that are fun. What Kieran is trying to explain is why people do things that are not fun.

“A guy who’s had a beard for 30 years and never changed it may have the odd scar or facial lumps that might get nicked in the shaving.”

That’s what makes it all so terribly interesting, said Eeyore. Not really knowing until afterwards.

I’ve always thought of it as “Well, if he’s going to the effort to shave off that beard, it’s only fair that I should do something too”. It’s not that I’m returning the favour to him, but that I feel that if the other person is doing something for a third party, that it’s only fair that I should do so too.

I don’t understand the sponsorship thing at all, it doesn’t make any sense.

Well, OK, the only possible explanation I can think of is this:

Suppose I’m a very rich guy. Theoretically I would like to make a donation, but being (obviously) a greedy selfish SOB, I’m thinking: “Why should I suffer giving my money away while all these poor people around me don’t sacrifice anything? I know they don’t any money to donate, but they should sacrifice something, suffer in some other manner, it’s only fair.”

And so, then, when some poor guy offers to run a marathon for a particular charity – that satisfies my SOB-ish sense of justice and I donate.

This is the only meaningless context I can imagine.

Publicity, man, publicity. For a fundraiser to be successful, it needs publicity. Quiggin knows that if he shaves off his beard, people pay attention, and when people pay attention they are more likely to contribute. I don’t see why this isn’t a completely sufficient explanation.

There are two kinds of signalling going on in most of these instances. The first is that the fundraiser gets to tell his friends and family how important the cause is to him. Without a demonstrable investment, there is no signal and no way to evaluate the claim on the person being asked. WIth a signal, the importance can be evaluated.

Philanthropists use reciprocity of donations: I will give to your cause if you will give to mine. The signalling is vital here as well: I can ask you for a large donation only once I have already demonstrably and publicly committed to give my own larger donation.

The second type of signalling benefits the cause in other ways: AIDS Walks done en masse in the downtown core of cities with high profile sponsors signal that the issue is important and acceptable to a lot of people.

If a lot of people are visibly sacrificing their comfort on a weekend morning, the rest of the population will ask why. It’s a big signal.

Signaling is the deus ex machina of economics.

Re #32, the economists have an answer to that: it’s called ‘cheap talk.’ John may say he cares about the charity but when he shaves his beard he demonstrates he cares about the charity.

Consider statements by three Johns (not the set-up to a hooker joke):

John1: Support charity X for reason Y.

John2: Support charity X for reason Y and I will run 5 miles.

John3 Support charity X for reason Y and I’ll drink beer.

John2 has made a costly signal of the value of charity X. The other Johns have not.

Re the football example, if you were deciding what football teams to support, you might say: team X’s fans paint their faces; team Y’s fans do not. I think team X’s fans demonstrate greater support for their team.

C. L., I agree that there is a signal, I don’t doubt that John2 is truly enthusiastic, but why should I care that someone is truly enthusiastic about something?

I’m saying that this only works only if you’re already inclined to contribute to this particular cause, but reluctant because you suspect that everybody else is free-riding. This is (imo) the only scenario when the signal is meaningful to you.

Same is the case with the telethons: you’re already interested in contributing -> you see many others contributing -> and you feel that, because you’re contributing along with a bunch of other people, you’re not a dupe (perhaps a mistake).

Sam, sorry, but I don’t think so. First, typically you don’t know anything about people who walk-run-swim-paint-faces, so this is an exception.

And secondly – more importantly – what’s there to trust? Is there a secret reason why fighting leukemia is the most important cause in the world, the reason that only John knows but won’t tell us? Of course not.

I think the brain process here goes something like this: John is a much respected person -> a lot of people will listen to him and contribute -> fewer free-riders -> safe for me to contribute. Voila.