A gift economy is an economic system based on gift-giving, in which goods or services get exchanged with no expectation of remuneration, reciprocity, or quid pro quo. This system differs from a market economy (aka [market system](https://www.masterclass.com/articles/learn-about-market-economy)), in which individuals exchange goods and services for money, or a barter economy, in which goods and services get exchanged for items or services of equal value.
Gift economies may reflect one, some, or all of the following characteristics:

1. __Community interdependence__: Gift economies aim to create a social bond between gift givers and receivers. This economic system builds strong social relationships between different communities, in which informal, reciprocal gift-giving ensures no one in any community will go without.
2. __Delayed reciprocity__: Because gift economies run on the idea that you should expect nothing in return, gift-giving exchanges often get delayed. If you receive a gift, you don’t pass it on or give another gift immediately.
3. __Indirect gift-giving__: In gift cultures, exchanging gifts is not limited to two people; it’s broadened to the entire community. For example, you may give a gift to someone who’s never given one to you, or vice versa.
4. __Intangible or spiritual rewards__: Gift economies are dependent on a type of sacred economics. Your altruism gets rewarded with good karma, honor, or a feeling of well-being instead of money or valuables.
5. __Relaxed tracking__: In the gift economy, keeping too close an eye on the value of each gift exchange and expecting future rewards of the same value goes against the spirit of the gift system.
6. __No exchange for capital goods or saving to increase personal wealth__: In certain cultures, if you receive the gift of a cow or goat, you should consume the animal instead of keeping or selling it. In the case of nonconsumable gifts (such as jewelry), you’d pay it forward by giving the gift to someone else and keep it moving through the exchange system. Keeping a gift for your own self-interest may be viewed as poor social behavior.
Here are several examples of real-life gift economies:

1. __Donating blood__: A blood donation given on a volunteer basis is a form of gift-giving in a gift economy. When you donate blood, you expect nothing in return, but you still receive a feeling of well-being and social belonging for giving to a stranger.
2. __Koha__: Koha is a custom of the Maori people in New Zealand, which involves visitors donating or giving gifts such as food, valuable items, or money to a tribal meeting house to support the cost of hosting a community gathering. The sociologist Marcel Mauss connected this tradition to the Maori belief in the “spirit of the gift” or the hau, in which a part of the giver gets entangled with the gift, compelling the receiver to give something in return.
3. __Kula exchange__: Kula (also known as the kula exchange or kula ring) is a ceremonial gift exchange between villages and islands in Papua New Guinea. Shell-disc necklaces and shell armbands are given in a ceremonial order and specific geographic direction to increase trust and trade between communities.
4. __Information gift economies__: These gift economies give out information freely and accept public collaboration in an open-source format. Another example is open-source software, where you can access and modify the source code on your operating system.
5. __Potlatch__: In a potlatch, a leader strengthens their community bond by giving away valuables to their supporters and gets rewarded with attribution of honor, respect, and social status. Indigenous cultures of the Pacific Northwest practice potlatch rituals.
6. __Religious gift-giving__: Many religions accept gifts or donations from their followers. Practitioners of Buddhism, Hinduism, Islam, Judaism, and Christianity accept gifts such as food or financial contributions as part of their religious practices.
7. __Sharing food__: In hunter-gatherer societies, sharing hunted or foraged food creates strong communities where inhabitants are not as likely to go hungry.
There are several advantages of a gift economy:

1. __Creates social bonds__: Giving gifts of services or food freely between groups strengthens community bonds and builds trust, creating a more peaceful society.
2. __Gives a feeling of personal satisfaction__: Being of service to others by giving freely can increase self-esteem and overall happiness on a personal level.
3. __May improve reputation__: Giving gifts without strings can boost your reputation, as wealthy philanthropists have learned throughout history.
4. __Provides for the economically marginalized__: A gift economy ensures that every community member is taken care of, even those who cannot work or have no goods or money to exchange.
In the urban sprawl of the modern world, a gift economy has many challenges to overcome:

1. __Less community connection__: Gift economies make sense in small villages where people live their entire lives within the same community of people. In the modern world, you may not know your neighbors, and more relationships come and go. It’s easier to get what you need from a market economy, where you pay a stranger to receive goods or services.
2. __Higher chance of exploitation__: Especially in large cities, there’s no real incentive to give back to a gift-giver because there will be no social shame if you never reciprocate. It can be harder to create a sense of an interdependent community in a large city.
3. __Market economies are too popular__: It’s challenging for gift economies to overcome the strength and popularity of market economies in the modern world.
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You don’t need to be an economist to understand a gift economy; you experience a version of it every time you go to a birthday party and bring a present as a part of the accepted social custom. Learn how gift economies strengthen relationships, and in some communities, even keep the peace.

You don’t need to be an economist to understand a gift economy; you experience a version of it every time you go to a birthday party and bring a present as a part of the accepted social custom. Learn how gift economies strengthen relationships, and in some communities, even keep the peace.

Gift Economy: Definition, Characteristics, and Examples

A gift economy is an economic system based on gift-giving, in which goods or services get exchanged with no expectation of remuneration, reciprocity, or quid pro quo. This system differs from a market economy (aka <a href='https://www.masterclass.com/articles/learn-about-market-economy' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/learn-about-market-economy","linkCopy":"market system","category":null}'>market system</a>), in which individuals exchange goods and services for money, or a barter economy, in which goods and services get exchanged for items or services of equal value.

What Is a Gift Economy?

Gift economies may reflect one, some, or all of the following characteristics:<ol class="mc-m-4"><li class="mc-my-4"> 1. Community interdependence: Gift economies aim to create a social bond between gift givers and receivers. This economic system builds strong social relationships between different communities, in which informal, reciprocal gift-giving ensures no one in any community will go without. </li><li class="mc-my-4"> 2. Delayed reciprocity: Because gift economies run on the idea that you should expect nothing in return, gift-giving exchanges often get delayed. If you receive a gift, you don’t pass it on or give another gift immediately. </li><li class="mc-my-4"> 3. Indirect gift-giving: In gift cultures, exchanging gifts is not limited to two people; it’s broadened to the entire community. For example, you may give a gift to someone who’s never given one to you, or vice versa. </li><li class="mc-my-4"> 4. Intangible or spiritual rewards: Gift economies are dependent on a type of sacred economics. Your altruism gets rewarded with good karma, honor, or a feeling of well-being instead of money or valuables. </li><li class="mc-my-4"> 5. Relaxed tracking: In the gift economy, keeping too close an eye on the value of each gift exchange and expecting future rewards of the same value goes against the spirit of the gift system. </li><li class="mc-my-4"> 6. No exchange for capital goods or saving to increase personal wealth: In certain cultures, if you receive the gift of a cow or goat, you should consume the animal instead of keeping or selling it. In the case of nonconsumable gifts (such as jewelry), you’d pay it forward by giving the gift to someone else and keep it moving through the exchange system. Keeping a gift for your own self-interest may be viewed as poor social behavior. </li></ol>

6 Characteristics of a Gift Economy

Here are several examples of real-life gift economies:<ol class="mc-m-4"><li class="mc-my-4"> 1. Donating blood: A blood donation given on a volunteer basis is a form of gift-giving in a gift economy. When you donate blood, you expect nothing in return, but you still receive a feeling of well-being and social belonging for giving to a stranger. </li><li class="mc-my-4"> 2. Koha: Koha is a custom of the Maori people in New Zealand, which involves visitors donating or giving gifts such as food, valuable items, or money to a tribal meeting house to support the cost of hosting a community gathering. The sociologist Marcel Mauss connected this tradition to the Maori belief in the “spirit of the gift” or the hau, in which a part of the giver gets entangled with the gift, compelling the receiver to give something in return. </li><li class="mc-my-4"> 3. Kula exchange: Kula (also known as the kula exchange or kula ring) is a ceremonial gift exchange between villages and islands in Papua New Guinea. Shell-disc necklaces and shell armbands are given in a ceremonial order and specific geographic direction to increase trust and trade between communities. </li><li class="mc-my-4"> 4. Information gift economies: These gift economies give out information freely and accept public collaboration in an open-source format. Another example is open-source software, where you can access and modify the source code on your operating system. </li><li class="mc-my-4"> 5. Potlatch: In a potlatch, a leader strengthens their community bond by giving away valuables to their supporters and gets rewarded with attribution of honor, respect, and social status. Indigenous cultures of the Pacific Northwest practice potlatch rituals. </li><li class="mc-my-4"> 6. Religious gift-giving: Many religions accept gifts or donations from their followers. Practitioners of Buddhism, Hinduism, Islam, Judaism, and Christianity accept gifts such as food or financial contributions as part of their religious practices. </li><li class="mc-my-4"> 7. Sharing food: In hunter-gatherer societies, sharing hunted or foraged food creates strong communities where inhabitants are not as likely to go hungry. </li></ol>

7 Examples of Gift Economies

There are several advantages of a gift economy:<ol class="mc-m-4"><li class="mc-my-4"> 1. Creates social bonds: Giving gifts of services or food freely between groups strengthens community bonds and builds trust, creating a more peaceful society. </li><li class="mc-my-4"> 2. Gives a feeling of personal satisfaction: Being of service to others by giving freely can increase self-esteem and overall happiness on a personal level. </li><li class="mc-my-4"> 3. May improve reputation: Giving gifts without strings can boost your reputation, as wealthy philanthropists have learned throughout history. </li><li class="mc-my-4"> 4. Provides for the economically marginalized: A gift economy ensures that every community member is taken care of, even those who cannot work or have no goods or money to exchange. </li></ol>

4 Advantages of a Gift Economy

In the urban sprawl of the modern world, a gift economy has many challenges to overcome:<ol class="mc-m-4"><li class="mc-my-4"> 1. Less community connection: Gift economies make sense in small villages where people live their entire lives within the same community of people. In the modern world, you may not know your neighbors, and more relationships come and go. It’s easier to get what you need from a market economy, where you pay a stranger to receive goods or services. </li><li class="mc-my-4"> 2. Higher chance of exploitation: Especially in large cities, there’s no real incentive to give back to a gift-giver because there will be no social shame if you never reciprocate. It can be harder to create a sense of an interdependent community in a large city. </li><li class="mc-my-4"> 3. Market economies are too popular: It’s challenging for gift economies to overcome the strength and popularity of market economies in the modern world. </li></ol>

3 Challenges of Implementing a Gift Economy

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You don’t need to be an economist to understand a gift economy; you experience a version of it every time you go to a birthday party and bring a present as a part of the accepted social custom. Learn how gift economies strengthen relationships, and in some communities, even keep the peace.

You don’t need to be an economist to understand a gift economy; you experience a version of it every time you go to a birthday party and bring a present as a part of the accepted social custom. Learn how gift economies strengthen relationships, and in some communities, even keep the peace.


White shell necklace with brown twine on a teal sheet made by indigenous peoples of Papa New Guinea.