The spirit of giving

Gift giving supports trust and cooperation

Gift giving at the onset of a relationship is widespread in many cultures. The norm of gift exchange at the beginning of a relationship may have developed because it supports cooperation. The giving of a gift imposes costs that would only be paid by actors who intended to engage in a mutually cooperative relationship – actors that intended to exploit the relationship for their own immediate benefit are reluctant to enter into relationships that require costly gifts. Gift-giving is an example of a costly signal, which can encourage trust and cooperation in a variety of contexts. The opportunity for actors to send costly signals of their trustworthiness could help improve several development outcomes, such as intergroup conflict and tax compliance.

Giving cash transfers is part of the poverty reduction solution

A World Bank review of cash transfer research found that cash transfers improve several development outcomes. For example, cash transfers have been shown to reduce poverty, child labor, and intimate partner violence. However, cash transfers are not a panacea for all development issues. They must be tailored to their context, and it’s not yet clear if all their short-term positive effects endure or dissipate after the cessation of transfers. The effects of cash transfers may also need to be bolstered by complementary interventions, such as training to acquire skills needed to succeed in the chosen income-generating activity. USAID’s Development Impact Lab is actively researching the utility of cash transfers to understand the role that they should play in USAID’s development assistance.

Do you have a study we should share for a future Facty Friday? Send an email to drg.el@usaid.gov!