Economic Dimensions of Household Gift Giving

Author(s): Thesia I. Garner and Janet Wagner

Source: Journal of Consumer Research, Vol. 18, No. 3 (Dec., 1991), pp. 368-379

Published by: Oxford University Press

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 Economic Dimensions of Household

 Gift Giving

 THESIA 1. GARNER

 JANET WAGNER*

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

 gift-giving model. Two dimensions of extrahousehold 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 demon-

 strated 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. Extrahousehold gift expenditures

 appear to be a luxury-as income increases, gift expenditures increase more rapidly.

 G ift 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 con-

 cepts from anthropology, sociology, and psychology.

 The potential contribution of economics to the gift-giv-

 ing 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 eco-

 nomics. 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 eco-

 nomic importance. Purchased gifts are estimated to ac-

 count 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 mem-

 bers (Belk 1979). Charitable contributions are estimated

 to account for an additional 2 percent of the household

 budget (Lamale and Clorety 1959), which suggests that

 in the United States alone a minimum of $78 billion

 may be spent annually on extrahousehold giving.' 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 re-

 search 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 con-

 sumer behavior. Although the purpose of much past

 research has been to explore the social dimensions of

 giving, preliminary information on economic dimen-

 sions 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, par-

 ticularly with respect to sample size and selection.

 *Thesia I. 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 re-

 search 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 anon-

 ymous reviewers for their many constructive comments.

 'This 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.

 368

 ? 1991 by JOURNAL OF CONSUMER RESEARCH, Inc. * Vol. 18 * December 1991

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

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 HOUSEHOLD GIFT GIVING 369

 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 de-

 mographic variables affected expenditures for extra-

 household gifts. Data were from the 1984-1985 Con-

 tinuing CE Survey, the largest and most comprehensive

 source of information on the incomes and expenditures

 of U.S. households, which are classified by socioeco-

 nomic 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 ex-

 trahousehold gift expenditures, and (2) what is the re-

 lationship 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 ex-

 change-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 ex-

 change may be an individual, household, or organiza-

 tion (Sherry 1983). The social norm underlying gift giv-

 ing 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 ex-

 pensive 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. Reci-

 procity is related to the extent of social interaction be-

 tween 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 amen-

 ability of gift giving to economic analysis has been ac-

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

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

 The focus of this debate has been the utility-maximi-

 zation assumption of the economic theory of consumer

 behavior. Under this assumption, consumers allocate

 resources among commodities that are traditionally as-

 sumed to be goods needed for personal consumption

 given their budget constraints. The objective of such

 decisions is to maximize personal satisfaction. In con-

 trast, 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 disci-

 plines 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 of-

 fered 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 com-

 modities are produced, given the household budget

 constraint, by combining market goods and services,

 the donor's time, education, and experience, "environ-

 mental" 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; be-

 havior 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 de-

 rived from giving. While most choose to give, some may

 not (Firth 1967). Either decision is likely to convey in-

 formation 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 Sur-

 vey, 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 im-

 portance of giving might be measured by analyzing in-

 come'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 ad-

 dressed (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 expen-

 ditures is smaller than that of income. Because extra-

 household gifts are instrumental in meeting social needs

 (Sherry 1983), they are likely to be luxuries. Therefore,

 we propose the following hypothesis:

 Hi: As income changes, the proportional change

 in extrahousehold gift expenditures will be

 greater than that of income.

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 370 JOURNAL OF CONSUMER RESEARCH

 PREVIOUS RESEARCH ON

 CONSUMER GIFT GIVING

 Previous research on the economic and social di-

 mensions of gift giving has been hampered by a variety

 of methodological problems, including data limitations

 (Davis 1972), lack of statistical rigor (Lamale and Clor-

 ety 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 in-

 tegrated to derive the estimate that purchases of gifts

 represent 4.3 percent of total annual expenditures. Bel-

 shaw (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 col-

 lected periodically by the BLS for a century. Prior to

 the 1972-1973 CE Survey, data were collected approx-

 imately 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 wed-

 dings 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 tab-

 ulations have shown that expenditures for gifts to char-

 ity 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 un-

 conditional 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 "net-

 works of love"-cross-household ties with family, kin,

 and friends (Belk 1979; Caplow 1982; Cheal 1987).

 Second, gift giving is gender based, with women assum-

 ing 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 sup-

 ported 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 Fernandez-

 Moreno 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) in-

 volving individuals outside the family than do Ameri-

 cans (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

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 HOUSEHOLD GIFT GIVING 371

 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 "swap-

 ping" 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 on 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 socio-

 economic and demographic characteristics is collected

 from consumer units within households for five con-

 secutive 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 expen-

 ditures, or (3) a single consumer who is financially in-

 dependent (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, re-

 sponses 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 expen-

 ditures were determined by summing expenditures in

 each category of purchased gifts and contributions. Al-

 though there may have been missing values in individ-

 ual gift categories, the likelihood of encountering miss-

 ing 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 oc-

 casions, the 4,146 households included in the sample

 were those from which four consecutive quarters of ex-

 penditure data were available. Seven consumer units

 reporting extreme values for either total annual expen-

 ditures 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 ex-

 trahousehold gift expenditures and (2) the correspond-

 ing level of gift expenditures. Extrahousehold gift ex-

 penditures were defined as total annual expenditures

 for gifts of goods, services, or money given to individ-

 uals, households, and organizations outside the con-

 sumer unit. For the remainder of this article, the terms

 "consumer unit" and "household" are used synony-

 mously, 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-in-

 come hypothesis suggests that total annual expenditures

 are an appropriate proxy for income because, in the

 short run, households have more control over expen-

 ditures than they do over income. Moreover, total an-

 nual 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,

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 372 JOURNAL OF CONSUMER RESEARCH

 number of female adults, stage in the family life cycle,

 ethnicity, education of the reference person,2 urbaniza-

 tion, and region were included in the estimating equa-

 tions. 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 Sta-

 ples (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), II (ages 3-5), III

 (ages 6-1 1), and IV (ages 12-18). However, some cells

 were underpopulated. Consequently, stages were col-

 lapsed for the purposes of statistical analysis. For young

 single parents, the parental stages were collapsed across

 the four categories into one category that included chil-

 dren from birth to age 18. Young married parents were

 grouped into three stages based on the age of the young-

 est 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 1 1) and II (ages 12-18). Mature

 married parents were grouped in the original four stages.

 Households in which the reference person was unem-

 ployed and households reporting a youngest child 19

 years of age or older were included in the "other" cat-

 egory. Young, single adult was the base category.

 In the CE Survey, ethnicity is based on self-identifi-

 cation. 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 nec-

 essary 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 Ger-

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

 Europeans" category comprised households reporting

 French, Polish, Russian, or Italian ancestry. Afro-

 Americans3 included all households identifying them-

 selves as such. Asians included all households identi-

 fying their ethnicity as "other" and their race as

 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 ele-

 mentary school only, less than a high school graduate,

 less than a college graduate, college graduate, or post-

 graduate. The base category was high school graduate.

 Location was represented by two sets of dummy vari-

 ables-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 de-

 fined 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" in-

 cluded 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 extra-

 household gift expenditure when the utility from giving

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

 mension 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 con-

 straint. 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 extra-

 household 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.

 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.

 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.

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 HOUSEHOLD GIFT GIVING 373

 TABLE 1

 RESULTS OF THE ANALYSES OF GIFT EXPENDITURES

 Magnitude of gift

 Households expenditures

 with gift Probability of gift expenditures

 Independent variables (base All households expenditures Corrected

 category) (n = 4,1 39) (n = 3,71 1) Coefficients Asymptotic SE coefficients SE

 Mean values for continuous

 variables:

 Total annual expenditures ($) 21,720.00 22,890.00 .5703a** .0473a .0561 .0031

 Family size 2.74 2.73 -.1 426** .0296 -117.8970** 30.0772

 Number of female adults 1.02 1.04 .2009** .0650 -66.6264 60.1014

 Absolute frequencies for dummy

 variables:

 Family life-cycle stage:

 (Young single adult) 278 252 ... ... ... ...

 Young single parent 64 52 -.0442 .2282 -42.7112 234.3050

 Young married adult 132 117 -.2081 .2236 -539.9260** 174.6070

 Young married parent 1 235 218 .2072 .1907 -208.6920 156.0720

 Young married parent 11 100 93 .0891 .2435 -216.3640 198.5500

 Young married parent III 77 67 -.0223 .2386 -214.1680 217.2250

 Mature single adult employed 397 362 -.0099 .1462 148.4640 126.9180

 Mature single adult retired 48 43 .3015 .2863 512.9190*** 252.6260

 Mature single parent 1 44 40 .0618 .3025 -242.2920 266.4700

 Mature single parent 11 87 77 -.0345 .2252 169.2810 201.3850

 Mature married adult employed 546 520 .1543 .1631 758.8790** 128.4890

 Mature married adult retired 73 72 .9331* .4421 499.81 00*** 217.6410

 Mature married parent 1 82 74 .3571 .2745 -123.8970 222.1950

 Mature married parent 11 116 110 .2869 .2582 -63.7571 196.6470

 Mature married parent III 276 252 -.2172 .1831 -265.0600 158.2890

 Mature married parent IV 327 302 -.1613 .1835 180.6040 150.7310

 Older single retired 370 325 .2907*** .1510 432.7930** 135.4760

 Older married retired 331 299 .2525 .1602 353.8930** 139.5040

 Older single employed 56 47 -.0742 .2462 474.3740*** 239.1430

 Older married employed 101 92 .0133 .2342 464.5590** 191.6200

 Other 400 297 -.1325 .1429 191.7110 140.8940

 Ethnicity:

 (Other) 1,850 1,683 ... ...

 Afro-American 404 307 -.1 909*** .0952 -2.6395 104.2020

 Hispanic 219 173 -.1203 .1264 40.4623 129.6200

 Anglo-Saxon 1,134 1,067 .1 766*** .0808 27.8823 61.5461

 Other European 428 389 .0293 .1064 5.6258 88.2212

 Asian 104 92 -.3258 .1946 86.5612 170.6210

 Education:

 (High school graduate) 1,230 1,102 ... ... ...

 Elementary or none 597 467 -.1223 .0910 -126.1770 94.3577

 Less than high school 566 477 -.0133 .0893 -116.5100 85.0380

 Less than college 844 792 .2052*** .0933 155.2120*** 74.7270

 College graduate 468 453 .3714** .1435 357.5810** 92.2725

 Postgraduate 434 420 .1577 .1425 203.931 0*** 93.8866

 Degree of urbanization:

 (Suburban) 1,610 1,498 ... ... ...

 City 1,433 1,237 -.2331 .0737 -77.8459 63.1365

 Rural 1,096 986 -.1 773*** .0798 -2.3468 66.0314

 Region:

 (South) 1,203 1,054 ... ... ... ...

 Northeast 891 792 -.1088 .0861 150.0910*** 75.3983

 Midwest 1,180 1,065 .0370 .0805 34.3378 68.0567

 West 865 800 .0882 .0960 -125.8630 76.0153

 Intercept .5404** .1573 -458.4930** 158.2790

 Xi ... ... 963.4760** 328.7280

 Chi-square (df = 38) 534.2300** ...

 Rho-squared .1940 ... ...

 F-statistic (df = 39, 3,671) ... ... 25.8628**

 Adjusted RF2 ... ... .2072

 aDivided by 10,000.

 **Significant at p < .01

 **Significant at p < .05.

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 374 JOURNAL OF CONSUMER RESEARCH

 TABLE 2

 RESULTS OF TESTS OF SIGNIFICANCE FOR SETS

 OF DUMMY VARIABLES

 Sets of Likelihood-ratio F-values for OLS

 variables statistic (df) (df )

 Family life cycle 39.4** (20) 7.03** (20, 3,671)

 Ethnicity 15.2** (5) .10 (5, 3,671)

 Education 16.0** (5) 34.88** (5, 3,671)

 Urbanization 10.8** (2) .90 (2, 3,671)

 Region 4.8 (3) 3.61*** (3, 3,671)

 **p <.01.

 ***p <.05.

 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 so-

 cioeconomic 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 re-

 lated to total annual expenditures and family size. The

 probability of gift expenditures was related to the num-

 ber of female adults. As shown in Table 1, the coefficient

 of Xi. 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 ur-

 banization. The value of expenditures was related to

 region of residence.

 Both models were effective in describing relation-

 ships, 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 Mc-

 Fadden (1985), is comparable to an R2 of 0.50, sug-

 gesting a good fit. The adjusted R2 value for the OLS

 model was 0.21.

 TABLE 3

 UNCONDITIONAL INCOME ELASTICITIES AND ESTIMATED

 GIFT EXPENDITURES

 Total annual Estimated extrahousehold

 expenditures Income gift expenditures

 ($) elasticity ($)

 22,890 (mean) 1.51 752.83

 10,000 1.59 206.23

 20,000 1.51 605.99

 30,000 1.43 1,104.71

 40,000 1.33 1,647.95

 50,000 1.26 2,205.42

 60,000 1.21 2,766.14

 70,000 1.18 3,327.40

 80,000 1.15 3,888.72

 90,000 1.13 4,450.04

 100,000 1.12 5,011.38

 DISCUSSION

 The percentage of households reporting extrahouse-

 hold 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 compa-

 rable 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 in-

 crease. 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 in-

 creases, the proportion that is allocated to expenditures

 for such gifts increases more rapidly than the propor-

 tional 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 consis-

 tent 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. How-

 ever, the elasticity of gift expenditures appears to decline

 as income increases. While the elasticity of gift expen-

 ditures was 1.59 for households with total annual ex-

 penditures of $ 10,000, it was only 1.12 for households

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 HOUSEHOLD GIFT GIVING 375

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

 is consistent with the notion that gift giving is instru-

 mental in meeting social needs (Sherry 1983). When

 low-income households experience a decline in income,

 they are likely to reduce their extrahousehold gift ex-

 penditures disproportionately. This reduction in gift

 expenditures may reflect the need to devote remaining

 income to physiological needs, which economists as-

 sume 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 elas-

 ticities suggest, however, that even at low-income levels

 there are many households that derive utility from giv-

 ing purchased goods or cash gifts, evincing the obliga-

 tory nature of gift giving (Mauss 1967) and the strength

 of the social needs that are met by reciprocity (Homans

 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 fam-

 ily 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 rel-

 atives. 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 im-

 mediate family are not only the most frequent recipients

 but that they also receive the most expensive gifts. Cap-

 low (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 ex-

 tensive. 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 con-

 trast, 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 Guvbar 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 gen-

 erously to children and grandchildren who live else-

 where, which is consistent with the observation that

 giving tends to be intergenerational and downward

 (Caplow 1982; Reece 1979). Although giving intergen-

 erationally 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 house-

 hold members age. While such contributions appear to

 be altruistic, they are often in return for services ren-

 dered during the lifetime of the donor.

 Our observations concerning the relationship be-

 tween 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 house-

 holds in which the reference person had some college,

 an undergraduate degree, or postgraduate education.

 Although income and occupation may be more in-

 fluential, education is considered an important indi-

 cator 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 famThis content downloaded from 146.142.1.10 on Wed, 30 Oct 2019 21:13:37 UTC

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 376 JOURNAL OF CONSUMER RESEARCH

 ilies may encounter more gift-giving situations than

 their less educated counterparts.

 Our results extend those of previous research on eth-

 nic 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 pur-

 chased gifts and cash among poor urban blacks. Because

 we controlled for the effects of income and other house-

 hold 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 house-

 hold budget to extrahousehold gifts was higher than that

 of other households. In a witty commentary on the An-

 glo-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 eth-

 nic groups in their expenditures for gifts given outside

 the home.

 Urban and rural households were less likely than

 suburban households to allocate income to extrahouse-

 hold 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 lim-

 ited 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" (Di-

 Leonardo 1987). Among households giving gifts, how-

 ever, the number of female adults appeared to have no

 effect on expenditures.

 We observed no differences in the probability of ex-

 trahousehold 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 po-

 tentially confounding variables. Region is a variable that

 is often included in expenditure analyses to capture re-

 gional 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 limi-

 tations 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 infor-

 mation on donor households; no information on recip-

 ients is available. Third, no data on gifts of time are

 available. Such information would enhance the impli-

 cations of our research with respect to econo*iYic 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 evi-

 dence 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 proba-

 bility 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 ref-

 erence 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 extrahouse-

 hold gift expenditures to a similar model of expenditures

 for personal consumption. In the meantime, our results

 suggest that income and other socioeconomic and de-

 mographic 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 ethno-

 graphic 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

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 HOUSEHOLD GIFT GIVING 377

 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 so-

 cial 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 tech-

 niques to explore this phenomenon. Given globalization

 of the world economy, cross-cultural research on ex-

 trahousehold 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 socioeco-

 nomic 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 intrahouse-

 hold 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 character-

 istics of individual consumer units. Assume there is an

 unobservable variable Gi' defined by the regression re-

 lationship

 Gi* = X'io + ui, i = 1, 2, ..., n, (Al)

 where Xi is a vector of regressors relating to the ith

 observation and ui is the error term that has a standard

 normal distribution. The greater the value of Gi', the

 greater is the probability that an expenditure will be

 made. As noted, G* is not observed; however, a dummy

 variable Gi is observed and can be defined as

 Gi = 1 if G0 > 0, and (A2)

 Gi= 0 otherwise.

 The probability that an extrahousehold gift expenditure

 is made can be expressed as

 P(Gi = 1) = P(Gi' > 0)

 = P(ui > -Xif3) (A3)

 =1 - bf x'p

 where b( * ) represents the cumulative standard-normal-

 distribution function for ui, A is the regression coeffi-

 cient, and a is the standard error of the regression equa-

 tion (Maddala 1984). For this model it is assumed that

 ui has a mean of zero and is independently, identically,

 and normally distributed, with a variance of a2. On the

 basis of symmetry,

 (X) )= 1-( xi (A4)

 Thus,

 P(Gi 1)=@ ') (A5)

 The observed values of Gi are realizations of a binomial

 process with probabilities, varying from consumer unit

 to consumer unit (depending on Xi), that are given by

 Equation A5. The likelihood function is

 L I= - (X a)] G [ (Xaf)] (A6)

 We estimated only f/u and not A and ai separately.

 However, using the probit-normalization a- = 1 (see,

 e.g., Goldberger 1964, chap. 5), we obtained an asymp-

 totically efficient estimate of 3 by maximizing the non-

 linear likelihood function (Eq. A6). The probit was es-

 timated with maximum likelihood using LIMDEP

 (Greene 1986).

 APPENDIX B

 This censored sample model is expressed as

 G*i = X'jiA + uli,

 G2* = X'22+ u I, and (B1)

 G2i= G2* if G* > 0, and

 G2i=0 if G*I<0 i=1,2,...,n,

 where {uli, u2i} are independently, identically, and

 normally distributed with zero mean, variances are a,2

 and 22, and covariance is 012. It is assumed that only

 the sign of G*I is observed and that G2*j is observed only

 when G* > 0. It is also assumed that XIi are observed

 for all i but X2j need not be observed for i such that

 G* < 0. We define

 w11 = 1 if G* > 0, and (B2)

 wli = if Gi < ?.

 Then {wli, G2i} constitute the observed sampl

 model (Amemiya 1984). A positive value of G*i' indi-

 cates that the consumer unit has a preference for giving.

 Actual expenditures are represented by G2i.

 For the censored sample, the expected value of G*2

 that is conditional on G* > 0 is given by

 E(G2* I G*I > 0) = X'2iO2 + E(u2i I uli > -XX'iA). (B3)

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 378 JOURNAL OF CONSUMER RESEARCH

 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) pro-

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

 estimation of the probability of a consumer unit's hav-

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

 estimation of Equation B3 by OLS regression using in-

 formation from the probability equation. The right-

 hand term in Equation B3 can be rewritten as

 E(U2il G > 0) = E(u2i I uli > -X'0l1) =- X(Zi); (B4)

 a-i

 where X(Zi)= ) and Zi = X' i- '(Z1) a-i O

 The X( * ) is the reciprocal of the Mills' ratio, also

 known as the hazard rate (Amemiya 1984). The prob-

 ability density function of the standard normal distri-

 bution is 0( * ), and the b( * ) is the cumulative distri-

 bution function of the standard normal. The expected

 expenditure by consumer unit i, conditional on its like-

 lihood of extrahousehold giving being positive, can be

 defined as

 E(G* I G*I > 0) = XIj32 + 0-12 X(Zi). (B5)

 The variable X(Zi) was estimated for each consumer

 unit. Probit analysis was used to obtain consistent es-

 timates of l1/a- (see Eq. A6 for specification of the

 probit-likelihood function). The estimates of fl/a- were

 used to calculate Zi for each consumer unit. The ap-

 propriate transformation was then used to obtain Xj, the

 proxy for X(Zi). In the second step, Xj was added to the

 regressors, and then the expenditure function was es-

 timated through OLS. The OLS coefficients that we

 present and discuss are corrected for the specification

 bias noted in Equation B3. The sample-selection model

 was estimated with LIMDEP (Greene 1986).

 Unconditional income elasticities were computed by

 taking the derivative of the expected value of gift ex-

 penditures and dividing this by the expected value of

 expenditures at different income levels, while setting

 the values of the other variables equal to their means.

 The expected value of gift expenditures (G2j) equals the

 probability that a consumer unit makes a gift expen-

 diture multiplied by the right-hand side of Equation

 B5. Or, E(G2i) = 'I(Z1)[X'2i2 + (0-12/-1)X(Zi)]

 [Received June 1990. Revised April 1991.]

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