Gift or Burden: Economics of Gift-exchange in China Open Access

Li, Xin (2016)

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The practice of gift exchange has been seen as "aiding in the formation and maintenance of social relationships and ultimately as contributing to realizing social harmony," which has always been of paramount importance in Chinese culture. However, with the passing of time, gifts have seem to become a "sweet burden" for households as publicized by the media. In order to study the practice of gift-exchange in China and whether it has become a heavy burden, this study examined the relevant factors that influence Chinese gift-exchange using 2010 data from the China Family Panel Studies (CFPS) (2010). Gift-exchange is shown to be very prevalent in China and the ratio of gift-expenditure and income is much higher compared to households in other countries, such as the United States. All in all, gift giving does not appear to be an extremely heavy burden on most Chinese households. However, the poorest households devote a relatively large percentage of income to gifts. Various social and demographic factors, employment, income level, community level characteristics, and province fixed effects are found to be significant predictors of gift-exchange activities. The mechanism behind these factors can be explained using the combination of social status concern and utility functions.

Table of Contents

Introduction. 1

Background information. 3

Literature review. 5

Data and Methods. 12

Results. 17

Discussion. 23

Bibliography. 40

Appendix. 43

Table 1. Sample characteristics 32

Table 2. Multivariate linear regressions results for GS/Inc. 33

Table 3. Multivariate linear regressions results for GR/Inc. 35

Table 4. Multivariate linear regressions results for GS/GR. 36

Figure 1.Distribution of GS/Inc. 38

Figure 2.Distribution of GR/Inc. 38

Figure 3.Distribution of GS/GR. 39

Figure 4.Comparison of GS/Inc and other expenditure / Inc. 39

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