Economic Dimensions of Household 

Gift Giving

THESIA I. GARNER 

JANET WAGNER*

The purpose of this research was to explore economic dimensions of a consumer 

gift-giving model. Two dimensions of extra household gift expenditures were modeled: 

the probability of giving and the expected value of the corresponding expenditures. Data 

were from 4,139 households in the Quarterly Interview component of the 1984-1985 

U.S. Continuing Consumer Expenditure Survey. The results demonstrated that both the 

probability of giving and the value of annual expenditures for gifts given outside the 

consumer unit are related to total expenditures (a proxy for income), family size, 

life-cycle stage, and education. In addition, the probability of gift giving is related to the 

number of female adults, ethnicity, and urbanization, and the value of gift expenditures is 

related to region. Extra household gift expenditures appear to be a luxury-as income 

increases, gift expenditures increase more rapidly.

Gift giving is a research issue of burgeoning interest in 

consumer behavior. Much of this interest stems from 

Sherry's (1983) model of consumer gift giving, in which he 

creatively and provocatively integrates concepts from 

anthropology, sociology, and psychology. The potential 

contribution of economics to the gift-giving model, 

however, is not well developed, probably because the 

fundamental assumptions of traditional economic theory 

(which are based on market exchange) appear to be at odds 

with gift giving (a form of social exchange). Indeed, most 

of the conceptual work on gift giving is the purview of 

social sciences other than economics. Market exchange and 

gift exchange, however, do not operate independently. 

Expenditures for gifts to individuals and charitable 

organizations, including purchased goods and cash gifts, 

are of substantial economic importance. Purchased gifts are 

estimated to account for more than 4 percent of the typical 

household budget (Davis 1972), and at least one-third of 

this amount is thought to involve gifts for nonfamily 

members (Belk 1979). Charitable contributions are 

estimated to account for an additional 2 percent of the 

household budget (Lamale and Clorety 1959), which 

suggests that

*Thesia Garner is an economist in the Division of Price and Index Number

Research of the U.S. Bureau of Labor Statistics, Washington., DC 20212. Janet 

Wagner is associate professor in the Department of Textiles and Consumer 

Economics, College of Human Ecology, University of Maryland, College Park, MD 

20740. This research represents a joint effort of the authors. The authors wish to 

thank Russell Belk, Keith Bryant, Manouchehr Mokhtari, Brent Moulton, John 

Sherry, Jeff Smith, and William Taft Stuart for their inspiration, advice, and 

encouragement. They also thank the anonymous reviewers for their many 

constructive comments.

in the United States alone a minimum of $78 billion maybe 

spent annually on extrahousehold giving.1 Thus, household 

gift expenditures are an important research issue because of 

the aggregate economic importance of gift giving and 

because of the vital role of gift giving in creating and 

maintaining social relationships (Sherry 1983).

Over 30 years ago, Lamale and Clorety (1959) noted 

economists' failure to systematically study household gift 

expenditures. Despite the availability of data from the U.S. 

Bureau of Labor Statistics' (BLS) Consumer Expenditure 

(CE) Survey series, ensuing economic research has been 

meager and often lacking in statistical rigor. In the 

meantime, gift giving has become a popular topic in other 

social science disciplines, including consumer behavior. 

Although the purpose of much past research has been to 

explore the social dimensions of giving, preliminary 

information on economic dimensions has also been 

collected (e.g., Belk 1979; Caplow 1982; Cheal 1987, 

1988). These results are valuable in providing direction for 

expenditure research, but they must be interpreted with 

caution because of limitations inherent in these studies' 

research methodologies, particularly with respect to sample 

size and selection.

1This estimate was based on the assumption that total expenditures for purchased 

gifts were 4.3 percent of mean total annual expenditures (Davis 1972). We assumed 

that approximately one-third of this gift expenditure was for extrahousehold giving 

(Belk 1979). An additional 2 percent of annual expenditures was allocated to charity 

(Lamale and Clorety 1959). The BLS (U.S. Department of Labor, Bureau of Labor 

Statistics 1988) estimates that in 1988 there were approximately 93,568,000 

consumer units, with mean total annual expenditures of $24,549.

© 1991 by JOURNAL OF CONSUMER RESEARCH, Inc.  Vol. 18  December 1991

All rights reserved. 0093-5301/92/1803-0009$2.00
HOUSEHOLD GIFT GIVING

In this article, we used concepts and methods from the 

economic theory of consumer behavior (Becker 1974, 

1976; Deaton and Muellbauer 1980) to analyze how 

income and a set of other socioeconomic and demographic 

variables affected expenditures for extrahousehold gifts. 

Data were from the 1984-1985 Continuing CE Survey, the 

largest and most comprehensive source of information on 

the incomes and expenditures of U.S. households, which 

are classified by socioeconomic and demographic 

characteristics. Two research questions were addressed: (1) 

How do socioeconomic and demographic characteristics 

affect the probability that a household will allocate part of 

its budget to extrahousehold gift expenditures, and (2) 

what is the relationship between the socioeconomic and 

demographic characteristics of households and the

expected value of extrahousehold giving? The first 

question was addressed through a probit model. Heckman's 

two-step estimator (1976, 1979) was used to model the 

second relationship.

GIFT GIVING AND ECONOMIC

THEORY

Gift giving involves both economic and social 

exchange-any resource, such as a good, a service, or cash, 

may be transformed into a gift via social interaction 

between a donor and a recipient. A party to the exchange 

may be an individual, household, or organization (Sherry 

1983). The social norm underlying gift giving is reciprocity 

(Gouldner 1960), which implies the obligation to give, 

receive, and reciprocate gifts (Mauss 1967). Reciprocity 

may differ with respect to the nature and immediacy of 

return. Thus, a tangible gift may be reciprocated with an 

intangible return. A gift may be returned immediately or 

not for several months or years. Although the return is 

expected to be equivalent to the original gift, value is not 

always measured strictly in economic terms (Arrow 1975). 

For example, an expensive toy that a grandparent gives to a 

grandchild may be reciprocated with love, an intangible gift 

of great social but little cash value. By observing 

reciprocity, consumers create and maintain social 

interaction, which allows them to meet their social needs. 

Reciprocity is related to the extent of social interaction 

between donor and recipient. Thus, gift giving is most 

common among family members but is also extended to 

unrelated individuals, families, and organizations with 

whom the donor has frequent contact (Becker 1976).

Because of its role in meeting social needs, the 

amenability of gift giving to economic analysis has been 

actively debated (Arrow 1975; Becker 1974, 1976; Burling 

1962; Cancian 1966; Herskovits 1952; Polyani 1958). The 

focus of this debate has been the utility-maximization 

assumption-of the economic theory of consumer behavior. 

Under this assumption, consumers allocate resources 

among commodities that are traditionally assumed to be 

goods needed for personal consumption

given their budget constraints. The objective of such 

decisions is to maximize personal satisfaction. In contrast, 

the objective of most gift giving is ostensibly to maximize 

the satisfaction and well-being of others. While scholars 

(e.g., Cheal 1988; Harris 1972; Mauss 1967; Reece 1979; 

Trivers 1985) in a variety of disciplines contend that such 

altruism is more apparent than real, Sherry (1983) argues 

that both altruism and self-interest affect giving. A 

resolution to this debate is offered by Becker (1974, 1976), 

who proposed extending the concept of a commodity to 

include social needs, such as affection, status, and 

distinction, that Sherry indicates are met by gift giving. 

Such intangible commodities are produced, given the 

household budget constraint, by combining market goods 

and services, the donor's time, education, and experience, 

"environmental" variables, and the characteristics and 

behavior of recipients. The Sherry model suggests that 

relevant characteristics of the recipient may include not 

only financial, physical, and emotional well-being, but also 

appearance, social role, and attitudes and opinions; behavior 

may include hints and direct requests for gifts. Like goods 

and services for personal consumption, such intangible 

commodities enter the household utility function and 

contribute to consumer satisfaction.

Consumers may differ with respect to the utility derived 

from giving. While most choose to give, some may not 

(Firth 1967). Either decision is likely to convey 

information about the household's characteristics. 

Households choosing to give must also decide how much 

to spend on gifts, a decision that is likely to be related to 

household income. In economic theory, the relationship 

between the quantity of a good purchased and household 

income is called an Engel curve. When using 

cross-sectional data, such as those of the CE Survey, prices 

are assumed to be constant (Phlips 1983), so the resulting 

Engel curve represents the relationship between household 

income and expenditures. Becker's (1974) theory of social 

interaction implies that the importance of giving might be 

measured by analyzing income's effect on gift 

expenditures.

Engel-curve analysis may be used to classify normal 

goods (i.e., those for which expenditures increase as 

household income increases) as either necessities or 

luxuries. The results of such analyses support the notion 

that physiological needs, particularly those related to 

survival, must be met before social needs can be addressed 

(Douglas and Isherwood 1979). Thus, a good such as food 

is a necessity (Deaton and Muellbauer 1980). For a 

necessity, when a household experiences a change in 

income, the proportional change in expenditures is smaller 

than that of income. Because extrahousehold gifts are 

instrumental in meeting social needs (Sherry 1983), they are 

likely to be luxuries. Therefore, we propose the following 

hypothesis:

H1: As income changes, the proportional change in 

extrahousehold gift expenditures will be greater 

than that of income.
PREVIOUS RESEARCH ON 

CONSUMER GIFT GIVING

Previous research on the economic and social 

dimensions of gift giving has been hampered by a variety 

of methodological problems, including data limitations 

(Davis 1972), lack of statistical rigor (Lamale and Clorety 

1959), possible bias in parameter estimation (Cheal 1986; 

Ryans 1977), and small sample sizes (Belk 1979; Caplow 

1982; Cheal 1987). Nevertheless, such studies have 

performed a valuable exploratory function and provided a 

rich point of departure for the development of our model.

Consumer Gift Expenditures

Studies of consumer gift expenditures have been 

conducted at both the aggregate and household levels. 

Davis (1972) explored aggregate gift giving in the United 

Kingdom. In the absence of comprehensive data on gift 

expenditures, information from government data on retail 

sales and a variety of consumer surveys was integrated to 

derive the estimate that purchases of gifts represent 4.3 

percent of total annual expenditures. Belshaw (1965) 

offered the "conservative" estimate that expenditures for 

gifts account for 10 percent of retail sales in North 

America. Although this estimate is widely cited, Belshaw 

failed to provide information on either his method or his 

source of data.

Data on household gift expenditures have been collected 

periodically by the BLS for a century. Prior to the 

1972-1973 CE Survey, data were collected approximately 

once every 10 years in a single interview in which 

consumers were asked to recall extrahousehold gift 

expenditures for the previous year. During the course of a 

year, consumers encounter many gift-giving occasions, 

including holidays, rites of passage, and spontaneous 

events (Sherry 1983). Thus, gift purchases are likely to be 

frequent and, with the exception of weddings and 

anniversaries, of relatively low value (Cheal 1988). Total 

annual expenditures for gifts may then be difficult for 

consumers to recall accurately. To improve accuracy, the 

CE data are now collected on a quarterly basis. Given the 

large sample size, the scientific nature of the sampling 

technique, and improvements in the collection procedures, 

the CE data are among the best available for studying 

extrahousehold gift expenditures.

Previous analyses of the CE data have shown that 94 

percent of households allocate part of their budgets to 

extrahousehold gift giving, including purchased goods and 

gifts of cash (U.S. Department of Labor, Bureau of Labor 

Statistics 1970). Research to date has been limited to 

charitable contributions. Simple cross tabulations have 

shown that expenditures for gifts to charity are positively 

correlated with income, negatively correlated with family 

size, and related to region, with households in the South 

spending the most (Lamale and Clorety 1959). More 

rigorous statistical techniques

have been used to explore the effect of income-tax policy 

on contributions to charity. The results demonstrate that 

contributions increase with age and that the unconditional 

income elasticity of such expenditures is greater than unity 

(Reece 1979; Reece and Zieschang 1985).

In other social sciences, the effect of income on gift 

giving has been studied with mixed results. Ryans (1977) 

analyzed the effect of household income and degree of 

urbanization on purchases of small-appliance gifts in 

department stores. The results of an ordinary least squares 

(OLS) regression procedure showed that income had no 

effect but that urban households were more likely to 

purchase such gifts in department stores than were rural 

households. The effect of economic resources on the value 

of Christmas gifts was studied by Cheal (1986), who also 

used an OLS analysis. The results demonstrated that income 

was related to the value of the gifts given. However, only 

households reporting positive values for Christmas gifts 

were included. Use of OLS in this context may create bias 

in estimating the parameters.

Social Dimensions of Gift Giving

The focus of most research on household gift giving has 

been its social dimensions. Although such studies have 

been characterized by small samples, which limit the 

generalizability of their results, two pervasive themes have 

emerged. First, gifts are vital in maintaining "networks of 

love"-cross-household ties with family, kin, and friends 

(Belk 1979; Caplow 1982; Cheal 1987). Second, gift giving 

is gender based, with women assuming primary

responsibility for giving gifts (Caplow 1982; Cheal 1986; 

DiLeonardo 1987; Fischer and Arnold 1990).

Most gift exchange occurs among family members (Belk 

1979), and it is intergenerational and downward, meaning 

that parents give to children and grandchildren (Caplow 

1982; Cheal 1988). The social networks supported by 

giving are not, however, limited to family members; as 

much as one-third of all giving involves unrelated 

individuals (Belk 1979). The range of giving networks may 

vary by culture. For example, Mexican households give to a 

broader range of family members than do French 

households (Jolibert and FernandezMoreno 1983). The 

Chinese are more likely to extend their giving to friends and 

even to strangers than are the English (Ma 1985). Similarly, 

Japanese consumers report more obligatory gift-giving 

occasions (kosai) involving individuals outside the family 

than do Americans (Alden and Green 1988). Although most 

people are part of a giving network, the nature and extent of 

reciprocity may differ by age, financial resources, or status 

(Belk 1979). For example, young children often give 

handmade items in return for purchased gifts. Gifts of cash 

are considered appropriate when adults give them to 

children but not vice versa. Cash gifts can also
be given to service providers of relatively low status 

(Caplow 1982).

As the "unpaid social directors" of their households 

(Schnudson 1986), women are responsible for creating and 

nurturing social networks (DiLeonardo 1987). 

Consequently, women give the majority of gifts, either as 

individuals or as part of a couple (Caplow 1982; Cheal 

1987; Fischer and Arnold 1990). Females' dominance of 

household gift giving pervades Western culture. Mexican 

women make most decisions regarding Christmas giving 

(Jolibert and Fernandez-Moreno 1983); poor urban black 

women orchestrate the "swapping" of gifts of time and 

possessions among family and friends (Stack 1974). 

Although most gifts are given by women, more expensive 

gifts are given by men (Caplow 1982; Cheal 1986; Fischer 

and Arnold 1990).

The research described in this article was based on data 

from a large national sample of households in the United 

States. We used a two-step regression procedure (Heckman 

1976, 1979) that allowed us to correct for possible 

sample-selection bias. In the first step, we tested how 

socioeconomic and demographic variables affected a 

household's probability of choosing to allocate part of its 

budget to extrahousehold gifts. In the second step, we 

tested for these variables' effects on expenditures among 

households that did choose to spend for such gifts.

METHOD

Sample

Data were from the Quarterly Interview component of 

the 1984-1985 U.S. Continuing CE Survey. The CE Survey 

data are collected via personal interview by the U.S. Bureau 

of the Census, under the auspices of the BLS, and are based 

or, a rotating panel. The panel's composition is determined 

by a national probability sample, stratified by primary 

sampling units that consist of counties (or parts thereof), 

groups of counties, or independent cities. The sample size is 

targeted at 5,000 interviews per quarter. In each quarter, 20 

percent of the panel rotates out and another 20 percent is 

added. Information on expenditures, income, and other 

socioeconomic and demographic characteristics is collected 

from consumer units within households for five consecutive 

quarters. Data from the first interview are for bounding 

purposes only. A consumer unit is defined as (1) all 

members of a particular housing unit who are related by 

blood, marriage, or adoption, (2) two or more persons who 

pool their incomes to make joint expenditures, or (3) a

single consumer who is financially independent (U.S. 

Department of Labor, Bureau of Labor Statistics 1988).

The expenditure component of the survey instrument is 

organized by category of goods and services. Within each 

category, respondents are asked to report what they 

purchased during the previous quarter for members of

the consumer unit, what they purchased as gifts to be given 

outside the consumer unit, and the amount spent. For gifts 

of cash, including contributions, respondents are asked to 

report the amount they gave to individuals and 

organizations separately. As in any survey, responses are 

subject to a variety of nonsampling errors, because of 

differences in interpretation of the questions and 

respondents' inability or unwillingness to provide correct 

information. Total extrahousehold gift expenditures were 

determined by summing expenditures in each category of 

purchased gifts and contributions. Although there may 

have been missing values in individual gift categories, the 

likelihood of encountering missing values in all categories 

is estimated to be less than .1 percent (U.S. Department of 

Labor, Bureau of Labor Statistics 1990).

To capture an entire year's worth of gift-giving occasions, 

the 4,146 households included in the sample were those 

from which four consecutive quarters of expenditure data 

were available. Seven consumer units reporting extreme 

values for either total annual expenditures or gift 

expenditures were eliminated to avoid the effects of 

outliers. Consequently, the subsample used in the analysis 

consisted of 4,139 consumer units.

Dependent Variables

The dependent variables were (1) the probability that a 

consumer unit will allocate part of its budget to 

extrahousehold gift expenditures and (2) the corresponding 

level of gift expenditures. Extrahousehold gift expenditures 

were defined as total annual expenditures for gifts of goods, 

services, or money given to individuals, households, and 

organizations outside the consumer unit. For the remainder 

of this article, the terms "consumer unit" and "household" 

are used synonymously, as are the terms "probability of gift 

giving" and "probability of gift expenditures."

Independent Variables

Income is a concept that is central to any economic 

analysis of household expenditures. The permanent-income 

hypothesis suggests that total annual expenditures are an 

appropriate proxy for income because, in the short run, 

households have more control over expenditures than they 

do over income. Moreover, total annual expenditures are 

less subject to random transitory variation than is income 

(Friedman 1957). Use of this proxy has a long and 

venerable tradition in expenditure analysis (Deaton and 

Muellbauer 1980). Because gift expenditures are one of its 

components, there may be bias resulting from the use of 

total annual expenditures; however, this bias is likely to be 

minimal because gift expenditures are a relatively small 

proportion of total household expenditures.

To control for the effects of household characteristics 

other than income on gift expenditures, family size,
number of female adults, stage in the family life cycle, 

ethnicity, education of the reference person,2 urbanization, 

and region were included in the estimating equations. 

Total annual expenditures, family size, and the number of 

female adults were treated as continuous variables. The 

remaining variables were treated as sets of dummy 

variables.

We used a modified version of the Murphy and Staples

(1979) family life-cycle model to create a set of 20 dummy 

variables that represented stages in the family life cycle. 

Each variable was defined by the age, marital status, and 

employment status of the reference person and by the 

presence or absence of children 18 years of age or younger. 

Households were cross classified by age as being young 

(18-34 years), mature (35-64 years), or older (65 years or 

more); by marital status as being either single or married; 

and by employment status as being either employed or 

retired. Households with children were initially classified 

by the age of the youngest child into parental stages I (birth 

to age 2), 11 (ages 3-5), III (ages 6-11), and IV (ages 

12-18). However, some cells were underpopulated. 

Consequently, stages were collapsed for the purposes of 

statistical analysis. For young single parents, the parental 

stages were collapsed across the four categories into one 

category that included children from birth to age 18. 

Young married parents were grouped into three stages 

based on the age of the youngest child: I (birth to age 2), II 

(ages 3-5), and III (ages 6-18). Mature single parents were 

classified into two stages: I (birth to age 11) and 11 (ages 

12-18). Mature married parents were grouped in the 

original four stages. Households in which the reference 

person was unemployed and households reporting a 

youngest child 19 years of age or older were included in 

the "other" category. Young, single adult was the base 

category.

In the CE Survey, ethnicity is based on 

self-identification. A set of five dummy variables was 

created from the original 17 ethnic categories that were 

provided by the BLS. This collapsing of categories was 

again necessary because some cells were underpopulated. 

All households of Mexican-American, Mexican, Chicano, 

Puerto Rican, Cuban, Central or South American, or 

Spanish descent were considered to be Hispanic. 

Households of English, Scottish, Welsh, Irish, or German 

descent were termed "Anglo-Saxon." The "other 

Europeans" category comprised households reporting 

French, Polish, Russian, or Italian ancestry. AfroAmericans3

included all households identifying themselves 

as such. Asians included all households identifying their 

ethnicity as "other" and their race as

 2According to the BLS, the reference person is the first person the 

interview respondent names as owning or renting the housing unit.

3The term "African-American" has recently become popular; however, 

when the 1984-1985 data were collected, "Afro-American" was still 

considered the proper term.

Oriental.4 The remaining households were classified as 

"other" and were included in the base variable. This 

included both households in ethnic groups that were not 

classified by the BLS and households in which ethnic 

identity was reported as "not known." Since many 

households in the United States are of mixed ethnicity, it 

was expected that many would fall into the "other" 

category.

Education was specified in terms of the five dummy 

variables of never attended school or completed elementary 

school only, less than a high school graduate, less than a 

college graduate, college graduate, or postgraduate. The 

base category was high school graduate.

Location was represented by two sets of dummy 

variables-one for region of residence and one for degree of 

urbanization. Region was represented by three dummy 

variables: Northeast, Midwest, and West. South was the 

base variable. Degree of urbanization was defined in terms 

of two dummy variables: "city" included all households 

located in central cities and other areas with populations of 

50,000 or more and "rural" included all households in rural 

farm and nonfarm areas, both inside and outside 

Metropolitan Statistical Areas. Suburban, which was the 

base category, included all other households.

The Model

We assumed that a consumer unit makes an 

extrahousehold gift expenditure when the utility from 

giving is greater than the utility from not giving. The first

dimension of the gift-giving decision was modeled through 

a probit qualitative-choice specification (see App. A). We 

also assumed that a household chooses levels of 

extrahousehold gift giving and personal consumption so as 

to maximize its utility subject to a budget constraint. 

However, because households may differ in their 

preferences, we expected that no extrahousehold gift 

expenditures would be observed for some households. 

Consequently, those expenditures were assumed to be 

truncated at zero, and the second dimension of 

extrahousehold gift giving was modeled as a censored 

sample using OLS with a sample selection correction (see 

App. B).

RESULTS

Descriptive statistics, including mean values for the 

continuous variables and frequencies for the dummy 

variables, are presented in Table 1. Results of the probit and 

OLS analyses are also presented.

Extrahousehold gift expenditures were reported by 3,711 

households, which was 90 percent of the sample.

4Although Asians represented only 2.5 percent of the subsample, this 

segment of the population is growing rapidly. Consequently, it was 

included in the analysis to provide a benchmark for comparison in future 

studies.

Among those households, the mean annual expenditure 

was $852, which was an average of 3.7 percent of total 

annual expenditures. For the sample as a whole, the mean 

expenditure was $ 764, which was an average of 3.5 

percent of total expenditures.

The probit results represent the relationship between the 

socioeconomic and demographic characteristics of 

households and the probability of gift expenditures. The 

OLS results represent the relationship between the 

socioeconomic and demographic characteristics of 

households and the expected value of gift expenditures. 

The results of the asymptotic t-tests for the coefficients in 

the probit model and the t-tests for the coefficients in the 

OLS model show that both the probability and the value of 

extrahousehold gift expenditures were related to total 

annual expenditures and family size. The probability of gift 

expenditures was related to the number of female adults. 

As shown in Table 1, the coefficient of i, the variable 

correcting for sample-selection bias, was significant.

The results of likelihood-ratio tests for the groups of 

variables in the probit model and joint F-tests for the groups 

of variables in the OLS model are presented in Table 2. The 

significance tests for the groups of variables were 

conducted in two stages. First, the likelihood-ratio statistics 

were calculated from the full and reduced equations in the 

probit model. Then the joint F-statistics were calculated 

from the full and reduced equations in the OLS model. 

Family life-cycle stage and education were related to both 

the probability and the value of extrahousehold gift 

expenditures. The probability of gift expenditures made 

was also related to ethnicity and urbanization. The value of 

expenditures was related to region of residence.

Both models were effective in describing relationships, 

as indicated by the value of the likelihood-ratio statistic for 

the probit model and the F-statistic for the OLS model. The 

rho-squared value for the probit model was 0.19, which, 

according to Domencich and McFadden (1985), is 

comparable to an R

2 of 0.50, suggesting a good fit. The 

adjusted R

2 value for the OLS model was 0.21.

DISCUSSION

The percentage of households reporting extrahousehold 

gift expenditures was somewhat lower than that of previous 

CE Surveys (see U.S. Department of Labor, Bureau of 

Labor Statistics 1970). While this result may represent a 

real decline, it may also be attributable to changes in 

collection procedures. The percentage of the household 

budget allocated to gifts was slightly lower than that 

estimated by Davis (1972) for the United Kingdom. 

However, the two are not directly comparable in that 

Davis's estimate includes gifts given within the home but 

does not include charitable contributions.

Total annual expenditures, the proxy for income, were 

positively related to both the probability and the value of 

gift expenditures. This relationship shows that (1) the 

higher the household income, the more likely it is that there 

will be expenditures for gifts and (2) as household income 

increases, expenditures for gifts increase. A series of 

unconditional income elasticities was calculated for the 

total sample (see App. B); these are presented in Table 3.

At the mean value of total annual expenditures, which 

was $22,890, the unconditional income elasticity of gift 

expenditures was 1.51. This elasticity suggests that 

extrahousehold gifts are a luxury-as income increases, the 

proportion that is allocated to expenditures for such gifts 

increases more rapidly than the proportional increase in 

income. This result is consistent with our hypothesis and 

lends support to Becker's (1974) theory of social interaction. 

Our finding is also consistent with the notion that, as 

income increases, tangible gifts may be substituted for 

intangible gifts because of a lack of time or, as Sherry 

(1983) suggests, because of an increase in the number of 

status subordinates. However, the elasticity of gift 

expenditures appears to decline as income increases. While 

the elasticity of gift expenditures was 1.59 for households 

with total annual expenditures of $10,000, it was only 1.12 

for households
with total annual expenditures of $100,000. This result is 

consistent with the notion that gift giving is instrumental 

in meeting social needs (Sherry 1983). When low-income 

households experience a decline in income, they are likely 

to reduce their extrahousehold gift expenditures 

disproportionately. This reduction in gift expenditures may 

reflect the need to devote remaining income to 

physiological needs, which economists assume must be 

met before social needs (Douglas and Isherwood 1979).

Belk (1979) reported that consumers may be absolved 

from gift giving by a paucity of resources. Our results are 

consistent with this suggestion in that households at low 

incomes were less likely to give externally than were 

households at higher incomes. The income elasticities 

suggest, however, that even at low-income levels there are 

many households that derive utility from giving purchased 

goods or cash gifts, evincing the obligatory nature of gift 

giving (Mauss 1967) and the strength of the social needs 

that are met by reciprocity (Romans 1961).

Our results are consistent with previous conceptual and 

empirical work suggesting that gifts are important vehicles 

for maintaining social networks. Family size was 

negatively related to both the probability and the magnitude 

of extrahousehold gift expenditures; as family size 

increases, the probability of spending for gifts to be given 

outside the home decreases. For families giving 

extrahousehold gifts, the amount spent decreases as family 

size increases. In large families, most of the household 

budget for gift exchange may be allocated to members of 

the immediate family, an interpretation that is consistent 

with Becker's (1974) theory of social interaction as well as 

with theoretical and empirical work in sociobiology 

(Trivers 1985) that demonstrates that reciprocal behavior is 

more common among relatives. The view that large 

families concentrate their gift expenditures on family 

members is also consistent with the results of Belk (1979), 

Caplow (1982), and Cheal (1988) that indicated that 

members of the immediate family are not only the most 

frequent recipients but that they also receive the most 

expensive gifts. Caplow (1982) implies that failure to give 

gifts within the family entails greater risk than failure to 

give outside because the most important social relationships 

are within the family. Camerer (1988) contends that giving 

within the family is more efficient than giving outside. 

Family members are well acquainted with each others' 

tastes and preferences, so there is less risk involved. 

Consequently, intrahousehold gifts are likely to be more 

expensive than those given outside.

As Sherry (1983) suggests, gift-giving behavior differs 

by stage in the family life cycle. Family life cycle affected 

the probability of giving extrahousehold gifts only for 

mature married adults (retired) and older single adults 

(retired). Households in those stages were more likely to 

give such gifts than were young single adults. The effect of 

family life cycle on expenditures was more extensive. In the mature and older stages in which no children 

were present-mature single adult (retired), mature married 

adult (employed or retired), older single adult (employed or 

retired), and older married adult (employed or 

retired)-expenditures for gifts were higher than they were 

for young single adults. In contrast, young married adults 

spent less than young single adults on extrahousehold gifts.

The effect of family life cycle on extrahousehold gift 

expenditures lends support to previous research on the 

social and economic dimensions of giving. The mature and 

older stages of the family life cycle are traditionally 

considered the empty nest (see Wells and Gubar 1966). 

Since giving extends to family members living in other 

consuming units (Belk 1979; Caplow 1982; Cheal 1988), 

households in this stage may give frequently and generously 

to children and grandchildren who live elsewhere, which is 

consistent with the observation that giving tends to be 

intergenerational and downward (Caplow 1982; Reece 

1979). Although giving intergenerationally and downward 

appears to contradict the notion that balance is important in 

gift giving (Sherry 1983), balance among family members, 

particularly across generations, is not measured strictly in 

terms of expenditures (Arrow 1975). In the process of 

giving, individuals in mature and older households may 

derive utility from the intangible returns of attention and 

love. According to Reece (1979), contributions to charitable 

and religious organizations tend to increase as household 

members age. While such contributions appear to be 

altruistic, they are often in return for services rendered 

during the lifetime of the donor.

Our observations concerning the relationship between 

family life cycle and extrahousehold gift giving may reflect 

a cohort rather than a life-cycle effect. A cohort effect 

seems unlikely, however, because rituals of reciprocity tend 

to be similar among households in the same stage of the 

family life cycle. The gifts that accompany rituals are used 

to keep definitions of social categories, like stage in the 

family life cycle, stable (Douglas and Isherwood 1979).

Education of the reference person was related to both the 

likelihood of allocating income to extrahousehold gifts and 

the amount allocated. The probability of such expenditures 

was greater among households in which the reference 

person had either some college education or an 

undergraduate degree. Similarly, the expected value of 

extrahousehold gifts was greater among households in 

which the reference person had some college, an 

undergraduate degree, or postgraduate education. Although 

income and occupation may be more influential, education 

is considered an important indicator of social class 

(Coleman 1983). Households of higher social class tend to 

have more extensive social networks. Conversely, 

lower-class families tend to have more limited social 

networks (Douglas and Isherwood 1979; Young and 

Willmott 1973). More educated fam-
ilies may encounter more gift-giving situations than their 

less educated counterparts.

Our results extend those of previous research on ethnic 

differences in gift giving (e.g., Alden and Green 1988; 

Jolibert and Fernandez-Moreno 1983; Ma 1985) by 

showing that Afro-Americans are less likely than others to 

spend money on extrahousehold gifts. This result does not 

necessarily imply that fewer gifts are given by 

Afro-Americans. In fact, "swapping" (Stack 1974) may 

serve as a substitute for the exchange of purchased gifts 

and cash among poor urban blacks. Because we controlled 

for the effects of income and other household 

characteristics that are often used to explain ethnic 

differences in consumption, our results suggest that 

swapping may be a pervasive feature of Afro-American 

culture.

Among households reporting Anglo-Saxon ethnicity, 

the probability of allocating a proportion of the household 

budget to extrahousehold gifts was higher than that of 

other households. In a witty commentary on the 

Anglo-Saxon character, King (1977) described members 

of that ethnic group as obsessed with social decorum, 

committed to noblesse oblige, and craving emotional 

detachment, suggesting that Anglo-Saxons may be more 

likely than others to observe reciprocity, to have a highly 

developed sense of obligation to give to those of lesser 

status, and to use gifts as "silent gestures"-vehicles for 

expressing emotions that they are reluctant to verbalize. 

No differences were observed, however, among the ethnic 

groups in their expenditures for gifts given outside the 

home.

Urban and rural households were less likely than 

suburban households to allocate income to extrahousehold 

gifts. In urban areas, social networks are diffuse. Social 

interaction is often superficial (Hannerz 1980), inhibiting 

the development of gift-giving relationships. In rural areas, 

on the other hand, networks may be limited in scope, so 

social interaction that is of sufficient intensity to foster gift 

giving may be limited. Ryans (1977) observed that rural 

households purchase fewer gifts in department stores, so 

our results may also reflect rural residents' limited access 

to shopping.

The number of female adults in the household was 

positively related to the probability that a household 

spends for gifts, confirming the argument that gift giving 

is gender based (Caplow 1982; Cheal 1987; Fischer and 

Arnold 1990) and that women perform most of the "ritual 

celebration of cross-household ties" (DiLeonardo 1987). 

Among households giving gifts, however, the number of 

female adults appeared to have no effect on expenditures.

We observed no differences in the probability of 

extrahousehold gift giving by region. However, among 

households choosing to give, expenditures for such gifts

were highest in the Northeast. Lamale and Clorety (1959) 

found that households in the South gave more than 

households in other regions. However, our results are not 

directly comparable because Lamale and Clorety

used simple cross-tabulations with no controls for 

potentially confounding variables. Region is a variable that 

is often included in expenditure analyses to capture 

regional differences in prices, so our results may reflect the 

tendency of prices to be higher in the Northeast than in 

other regions.

Our results must be interpreted in light of the limitations 

inherent in the CE Survey data. First, the data are limited to 

expenditures for gifts that are to be given outside the home. 

Second, the data only include information on donor 

households; no information on recipients is available. 

Third, no data on gifts of time are available. Such 

information would enhance the implications of our 

research with respect to economic theory. Finally, no 

information is available on the cost of gift wrapping. 

Although wrapping is likely to be a small component of 

gift expenditures, it may be viewed by some consumers as 

an integral part of a gift.

CONCLUSION

Becker's (1974) theory of social interaction was used as a 

framework for analyzing the economic dimensions of 

extrahousehold gift giving. The results showed that income 

is positively related to both the probability of expenditures 

for extrahousehold gifts and the expected value of those 

expenditures. The results also indicated that extrahousehold 

gift expenditures are a luxury with a change in income, the 

proportionate change in expenditures is greater than that of 

income. This change is greater at low than at high incomes, 

providing evidence of the obligatory nature of giving 

(Mauss 1967).

We included a set of socioeconomic and demographic 

variables in the estimating equations to control for their 

effect on income. Our results showed that the probability of 

extrahousehold gift expenditures is related to family size, 

number of female adults in the household, stage in the 

family life cycle, ethnicity and education of the reference 

person, and degree of urbanization. The expected value of 

these expenditures is related to family size, stage in the 

family life cycle, education of the reference person, and 

region.

Lutz (1979) questioned the need for a model that is 

specific to consumer gift giving. We propose that, in future 

research, the need for a separate gift-giving model should 

be tested by comparing a model of extrahousehold gift 

expenditures to a similar model of expenditures for personal 

consumption. In the meantime, our results suggest that 

income and other socioeconomic and demographic 

characteristics should be incorporated into the Sherry 

(1983) model of consumer gift giving.

By identifying how extrahousehold gift expenditures 

differ among socioeconomic and demographic groups, our 

results offer a point of departure for future ethnographic 

research that compares the giving practices of different 

social groups. For example, consumers from a variety of 

income groups might be interviewed to learn how they view 

expenditures for extrahousehold gifts as
compared with gifts for either their own consumption 

(Mick and DeMoss 1990) or for that of family members. 

Consumers who cannot afford to give might be studied to 

explore how their financial situation affects their social 

relationships; the homeless pose a special challenge (see 

Hill and Stamey 1990). Our results showed that 

Afro-American households appear to be less likely than 

others to allocate income to extrahousehold gifts. An 

intriguing possibility might be to use interpretive 

techniques to explore this phenomenon. Given 

globalization of the world economy, cross-cultural 

research on extrahousehold giving may also present 

opportunities for consumer researchers.

The CE Survey data are a rich source of information on 

extrahousehold gift expenditures. We suggest that, in future 

research involving these data, the socioeconomic and 

demographic determinants of expenditures in major gift 

categories, including clothing, toys, china, and plants (Belk 

1979; Caplow 1982), be explored. Given that the CE data 

are collected on a continuous basis, an analysis of 

extrahousehold gift expenditures over time may also be in 

order. At a more ambitious level, we propose that 

expenditure data on intrahousehold giving be collected and 

compared with data on extrahousehold giving. Such 

research will be valuable to scholars interested in 

continuing to build the Sherry (1983) model.

APPENDIX A

The decision to allocate income to extrahousehold giving 

is unique to the individual consumer unit and can be 

explained in terms of the relationship between an 

unobservable response variable and the characteristics of 

individual consumer units. Assume there is an 

unobservable variable Gi* defined by the regression 

relationship
The second term on the right-hand side of this equation is 

ignored in standard regression procedures. To correct for 

this specification bias, Heckman (1976, 1979) proposed a 

two-step estimator that in our case involves (1) estimation

of the probability of a consumer unit's having an 

extrahousehold expenditure (see App. A) and (2) 

estimation of Equation B3 by OLS regression using 

information from the probability equation. The righthand 

term in Equation B3 can be rewritten as

REFERENCES

Aden, Dana L. and Robert T. Green (1988), "Functional 

Equivalence in Cross-cultural Consumer Behavior: 

GiftGiving in Japan and the United States," Psychology and 

Marketing, 5 (Summer), 155-168. Amemiya, Takeshi 

(1984), "Tobit Models: A Survey," Journal

of Econometrics, 24 (January/February), 3-61.

Arrow, Kenneth (1975), "Gifts and Exchanges," in 

Altruism, Morality, and Economic Theory, ed. 

Edmund Phelps, New York: Russell Sage, 13-28.

Becker, Gary (1974), "A Theory of Social Interaction," 

Journal of Political Economy, 82 

(November/December), 1063-1093.

---------(1976), The Economic Approach to Human

 Behavior, Chicago: University of Chicago Press.

Belk, Russell (1979), "Gift-giving Behavior," in Research 

in Marketing, ed. Jagdish Sheth, Greenwich, CT: JAI, 

95126.

Belshaw, Cyril (1965), Traditional Exchange and Modern 

Markets, Englewood Cliffs, NJ: Prentice-Hall.

Burling, Robin (1962), "Maximization Theories and the 

Study of Economic Anthropology," American 

Anthropologist, 64 (4), 802-821.

Camerer, Colin (1988), "Gifts as Economic Signals and 

Social Symbols," American Journal of Sociology, 94, 

S 1805214.

Cancian, Frank ( I 966), "Maximization as Norm, Strategy 

and Theory: A Comment on Programmatic Statements 

in Economic Anthropology," American 

Anthropologist, 68 (2), 465-470.

Caplow, T. (1982), "Christmas Gifts and Kin Networks," 

American Sociological Review, 47 (June), 383-392.

Cheal, David (1986), "The Social Dimensions of Gift 

Behavior," Journal of Social and Personal 

Relationships, 3 (4), 423-439.

----------(1987), "Showing Them You Love Them: Gift

 Giving and the Dialectic of Intimacy," Sociological

 Review, 35 (1), 150-169.

----------(1988), The Gift Economy, New York: Routledge.

Coleman, Richard P. (1983), "The Continuing Significance 

of Social Class to Marketing," Journal of Consumer 

Research, 10 (December), 265-280.

Davis, J. (1972), "Gifts and the U.K. Economy," Man, 7 

(Fall), 408-429.

Deaton, Angus and John Muellbauer (1980), Economics 

and Consumer Behavior, Cambridge: University Row.

DiLeonardo, Micaela (1987), "The Female World of Cards 

and Holidays: Women, Families, and the Work of 

Kinship," Signs, 12 (Spring), 440-453.

Domencich, T. A. and D. McFadden (1985), Urban Travel. 

A Behavioral Analysis, Amsterdam: North Holland.

Douglas, Mary and Baron Isherwood (1979), The World of 

Goods, New York: Basic.

Firth, Raymond, ed. (1967), Themes in Economic 

Anthropology, London: Tavistock.

Fischer, Eileen and Stephen J. Arnold (1990), "More Than 

a Labor of Love: Gender Roles and Christmas Gift 

Shopping," Journal of Consumer Research, 17 

(December), 333-345.

Friedman, Milton (1957), A Theory of the Consumption 

Function, Princeton, NJ: Princeton University Press.

Goldberger, A. S. (1964), Econometric Theory, New York: 

W iley.

Gouldner, Alvin ( I 960), "The Norm of Reciprocity: A 

Preliminary Statement," American Sociological 

Review, 25 (2), 176-197.

Greene, William H. (1986), LIMDEP, Version 4, New 

York: Econometric Software.

Hannerz, Ulf (1980), Exploring the City, New York: 

Columbia University Press.
Harris, Marvin (1972), "Bah Humbug," Natural History, 81 (10), 

21-25.

Heckman, James J. (1976), "The Common Structure of Statistical 

Models of Truncation, Sample Selection and Limited 

Dependent Variables and a Simple Estimator for Such 

Models," Annals of Economics and Social Measurement, 5 

(Fall), 475-492.

----------(1979), "Sample Selection Bias as a Specification Error,"

 Econometrica, 47, 153-161.

Herskovits, Melville J. (1952), Economic Anthropology, New 

York: Knopf.

Hill, Ronald Paul and Mark Stamey (1990), "The Homeless in 

America: An Examination of Possessions and Consumption 

Behaviors," Journal of Consumer Research, 17 

(December), 303-321.

Romans, G. C. (1961), Social Behavior. Its Elementary Forms, 

New York: Harcourt, Brace & World.

Jolibert, J. P. and Carlos Fernandez-Moreno (1983), "A 

Comparison of French and Mexican Gift-giving Practices," 

in Advances in Consumer Research, Vol. 10, ed. Richard P. 

Bagozzi and Alice M. Tybout, Ann Arbor, MI: Association 

for Consumer Research, 191-196.

King, Florence (1977), Wasp, Where Is Thy Sting? New York: 

Stein & Day.

Lamale, Helen H. and Joseph A. Clorety, Jr. (1959), "City 

Families as Givers," Monthly Labor Review, 82 

(December), 1303-1311.

Lutz, Richard (1979), "Consumer Gift-Giving: Opening the 

Black Box," in Advances in Consumer Research, Vol. 6, ed. 

William L. Wilkie, Ann Arbor, MI: Association for 

Consumer Research, 329-331.

Ma, Hing-Keung (1985), "Cross-cultural Studies of the 

Hierarchical Structure of Human Relationships," 

Psychological Reports, 57, 1079-1083.

Maddala, G. S. (1984), Limited-dependent and Qualitative 

Variables in Econometrics, Cambridge: Cambridge 

University Press.

Mauss, Marcel (1967), The Gift, New York: Norton.

Mick, David Glen and Michelle DeMoss (1990), "Self-Gifts: 

Phenomenological Insights from Four Contexts," Journal of 

Consumer Research, 17 (December), 322-331.

Murphy, Patrick E. and William A. Staples (1979), "A 

Modernized Family Life Cycle," Journal of Consumer 

Research, 6 (June), 12-22.

Phlips, Louis (1983), Applied Consumption Analysis, 

Amsterdam: North-Holland.

Polyani, Karl (1958), "The Economy as an Institutional Process," 

in Trade and Markets in the Early Empire, ed. Karl Polyani 

et al., New York: Free Press, 243-270.

Reece, William S. (1979), "Charitable Contributions: New 

Evidence on Household Behavior," American Economic 

Review, 69 (March), 142-151.

-----------and Kimberly D. Zieschang (1985), "Consistent 

 Estimation of the Impact of Tax Deductibility on the Level 

 of Charitable Contributions," Econometrica, 53 (March),

 271-293.

Ryans, Adrian B. (1977), "Consumer Gift Buying Behavior: An 

Exploratory Analysis," Contemporary Marketing Thought, 

Series 44, ed. O. Bellinger and B. Greenberg, Chicago: 

American Marketing Association, 99-104.

Schnudson, Michael (1986), Psychology Today, 20 (December), 

26-29.

Sherry, John F. (1983), "Gift-Giving in Anthropological 

Perspective," Journal of Consumer Research, 10 

(September), 157-168.

Stack, Carol (1974), All Our Kin, New York: Harper & Row.

Trivers, Robert (1985), Social Evolution, Reading, MA: 

Benjamin/Cummings.

U.S. Department of Labor, Bureau of Labor Statistics (1970), 

"Gifts and Contributions in Consumer Expenditure 

Surveys," CES Research Note 6, Washington, DC: 

Government Printing Office.

------------(1988), "Consumer Expenditure Survey: Quarterly Data

 from the Interview Survey," Report 778, Washington, DC: 

 Government Printing Office.

------------(1990), Personal communication with Richard Dietz, 

 economist, Division of Consumer Expenditure Surveys, U.S. 

 Department of Labor, Bureau of Labor Statistics (December 

 4).

Wells, William D. and George Gubar. (1966), "Life Cycle 

Concept in Marketing Research," Journal of Marketing 

Research, 3 (November), 355-363.

Young, Michael and Peter Willmott (1973), The Symmetrical 

Family, London: Routledge & Kegan Paul.