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

Published online by Cambridge University Press:  06 November 2019

Marek Hudik Open the ORCID record for Marek Hudik [Opens in a new window]  and
Eddy S. Fang
Marek Hudik*
Affiliation:
Faculty of Business Administration, University of Economics, Prague, Prague, Czech Republic
Eddy S. Fang
Affiliation:
International Business School Suzhou, Xi'an Jiaotong-Liverpool University, Suzhou, China
*
*Corresponding author. Email: marek.hudik@gmail.com
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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.

Keywords

In-kind giftsmoney giftsred packetsgift-giving normsChina
Type
Symposium on Institutional Analysis and the Gift
Information
Journal of Institutional Economics , Volume 16 , Issue 5 , October 2020 , pp. 731 - 746
Copyright
Copyright © Millennium Economics Ltd 2019

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