ABSTRACT

People make gifts in the form of unilateral transfer of money from themselves to others. Some give alms to beggars, many donate to charities, while a select few donate a majority of their wealth to philanthropy. In conventional economics, gifting is often considered an anomaly because it is inherently costly and hence incompatible with the goals of utility maximization. The question whether an act so central to economics (conventionally defined as the science of allocation of scarce resources) really could nonetheless be “unfit” for the economic approach, which I call the gifting puzzle, has recently garnered a variety of answers from scholars, some of which are discussed in this chapter.

The gifting puzzle also lies at the heart of the practice and justification of tax deductions. In particular, tax breaks offered to donors rest on the assumption that gifting is conceptually distinct from ordinary acts of consumption: that a donation, even when it is followed by a thank-you gesture, is not still another instance of economic transaction. This chapter is also a plea for such a non-reductive view about what a donation fundamentally is.