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giving and the gift economy

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Far too frequently I fantasise about winning Who Wants to be a Millionaire? (not the lottery, I understand basic probability). My current thoughts are that with the money I would invest about half of it (maybe pay off the mortgage, the rest probably in index funds). The other half of it, I’d be giving away.

Only about £100k (10% of the £1m) would be heading in a truly charitable direction, with the other £400k being split amongst my close family - siblings and parents. I enjoy giving, and feel that this would be the right thing for me to do.

This leads me to thinking about gift economy. From wikipedia:

A gift economy is an economic system in which goods and services are given without any explicit agreement for immediate or future quid pro quo.

I find this concept really easy to understand. The point is that you give things away. Giving things away gets you more status / karma / brownie points etc, and those are really important, more important than things. In a gift economy hoarding is bad. If you hoard things then you are disrupting the system, meaning that people in need will go without and you will lose your good name (in some sense).

The beauty of the gift economy is that everything that people give has to be received by someone. In this way, as long as everyone pretty much takes part, you don’t lose out.

I’m always struggling to explain gift economies to people because they fixate on how you know that you get back as much as you put in. This is frustrating to me, because part of the whole point is that you probably don’t. But the status/karma/brownie points that you do get are more important as a marker of success than cash.

Gift economies are kind of the opposite of capitalist economies. It seems reasonable that a gift economy works best on a small scale where all participants are connected to each other. It’s plausible that a gift economy only works on a small scale.

As with all types of economies, gift economies rarely exist in pure forms and for all products. The most notable real life examples are found in traditional Pacific Island cultures (dying out somewhat), but they exist in extremely modern cultures - open source software is essentially a gift economy, as is economy of blood donation in the UK. Recently (although it’s not described as such) Trent @ the simple dollar tried to describe the gift economy that exists within parts of his extended family and if you think about it, it’s normal for gift economies to exist inside nuclear families.

This has been my best attempt at explaining what a gift economy is. To a certain extent, there’s a gift economy within my own family (siblings and parents) although it operates partly as a market economy as well. What do you think?

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17 comments for “giving and the gift economy”

  1. Whenever I think about winning a million bucks, I always bemoan the amount of money that I will have to pay in taxes - approx. 40% in the US. So really, winning $1M is more like winning $600K.

    Posted by rocketc | April 10, 2008, 2:04 pm
  2. I guess we have sort of a gift economy within our church. We’re always passing down our kids’ clothes to others, and other people pass their kids’ clothes down to us.

    And on the bulletin board at church, people can post what they have, but don’t need, and others can post what they need and don’t have. And all the stuff gets passed around. It works pretty well.

    As far as winning a million dollars…I tend to think like rocketc. :)

    Posted by Lynnae | April 10, 2008, 3:04 pm
  3. Hey, even at 40%, it’s still 600K more than I already have. :)

    I am skeptical that we can learn to behave in a completely altruistic way. I’m sure there are some people who can, but most of us do still expect to gain something in exchange. Even if it’s just good karma, though I suspect most people would prefer a quid pro quo.

    I have a tendency to give things away (especially lately), but I am also expecting to benefit - mostly, I’ve been feeling overwhelmed by stuff. I’d rather it not be thrown away, so I pass it off on others. Ideally, they get use out of it, and I get that feeling of lightness. :)

    And now you’ve got some wheels turning in my head…

    Posted by deepali | April 10, 2008, 4:19 pm
  4. As Lynnae says, I’ve also experienced the gift economy of a small church growing up (which I disliked for other reasons).

    People gave clothes, meals when others were sick or had new babies, babysat, prayed (a type of gift), and took up special collections when people needed financial assistance or even for people outside the church.

    Posted by Mrs. Micah | April 10, 2008, 11:21 pm
  5. @rocketc:
    In the UK tax isn’t payable on prizes, so it’s not a problem for me :)
    @Lynnae and Mrs. Micah:
    A church is the sort of thing that should have (mostly) a gift economy. Creating a strong community is a feature of a gift economy and not so a market economy (you are less likely to be attached to a shopkeeper if all they do is sell you things you want).

    I also don’t think we can behave completely altruistically. As I understand it, actual gift economies rely more on the status you get from giving things away. It’s not altruism at all, just not material reward, but one that can be equally as important to people.

    Posted by plonkee | April 11, 2008, 7:20 am
  6. We practice this in our family, though I never thought about this as “an economy”.

    We give part of what we have (though it many not always be what we “don’t need”)to the other members who do not have.

    The idea is to bring up the economic average of the family.

    Posted by fathersez | April 11, 2008, 12:41 pm
  7. My brother won $100 thousand dollars with a scratch ticket. He was working, and the ticket fell off the roll. Once it’s off the roll, there’s a law stating you can’t sell it. Talk about destiny. It translated to $70 thousand in cash.

    What did he do with it? Unfortunately, he was quite irresponsible, lived like a king until the money ran out. Now he’s back to square one!

    But that’s my little brother (43 years old) and I do love him!


    Posted by Lisa | April 11, 2008, 2:36 pm
  8. Well to do with the taxes thing. Sure the government takes 40% but most lotteries, unless there the scratchcard type, are usually much more then 1 million. Plus in the US there are those 100+ million lotteries. Sure if the government took 40% of my hundred million I’d be a little ticked, but only for a moment, cause I still got the other 60 :D.
    How much to give away though, hmmm. Do you give away as a percentage of your wealth, or as a monetary value? That I don’t know.

    Posted by Save Money | April 12, 2008, 2:56 am
  9. I think there is a greater chance of making a million. I never win anything!

    Posted by Pension | April 12, 2008, 6:07 pm
  10. I think gift economies work withing small-close knit groups, especially among close family members where there may be evolutionary advantages. After all, my brother’s success in life increases the chances the genes we share will be passed along to the next generation.

    Posted by E.C. | April 13, 2008, 5:08 am
  11. Have you applied to enter WWTBAM? You should. I’ve been trying to get my dad to enter for years, he’s got a lot of accumulated useless general knowledge.

    I find organ donation really interesting, here’s a good post about it from a few days ago on CT. Saw a story on the Daily Mail’s site yesterday (I know, I know, but I skip the Muslim-bashing) about a dying woman who wasn’t allowed to donate her lung or some other organ to her mother, who needed one. It went to the most needy person on the donation list. Probably goes without saying, but in reading the comments the DM readership aren’t too hot on gift economy.

    Posted by guinness416 | April 13, 2008, 7:02 pm
  12. @guinness416:
    I don’t know why, but I’m not remotely surprised that the DM readership aren’t too hot on the gift enconomy. On the other hand, I can see them having the exact same story if the organ went to the mother, but from the point of view of the most needy person on the list. With roughly the same comments about how terrible it is.

    Posted by plonkee | April 14, 2008, 11:06 am

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