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MIT Sloan study shows how technology can increase gift giving

CAMBRIDGE, Mass., March 19, 2018 - Gift giving is an age-old tradition, but how is it being affected by technology? Are online gift exchanges increasing, and are they becoming a substitute for offline gifts? In a study by MIT Sloan School of Management Professor Dean Eckles, he found that online gifting increases the likelihood that others will send gifts. About half of these gifts were unlikely to have occurred offline or via another online channel. 

"We analyzed how social networks and reciprocity impact behavior to better understand the viral nature of online gifting. We found substantial evidence of social influence driving gift giving behavior," says Eckles.

In the study, Eckles and his colleagues analyzed online gift giving behavior on Facebook for adults in the U.S. during 2013. During that time, Facebook reminded users of their friends' birthdays and provided the option of sending an online gift––like a $15 Starbucks gift card––through the platform. They complemented that data with surveys to get additional context.

The researchers found that when a person received a gift on Facebook for their birthday, they were then 56% more likely to also give an online gift through Facebook. This meant that approximately a third of all gifts given on Facebook after people's birthdays were inspired by receiving a gift in the first place.

"This suggests that receiving an online birthday gift can change the recipients' awareness of the product and beliefs about social norms––since they observe that people give gifts with this product and perhaps they themselves enjoy the experience of receiving one," says Eckles, who worked at Facebook when the study was conducted.

Most of these online gifts were reciprocal in being gifts to people who had given them gifts, online or offline, before. Three-fourths of gift givers on Facebook reported having received a gift in the past from the person they gave the gift to, but only 11% of the recipients engaged with direct reciprocity on Facebook. Eckles explains, "This shows that Facebook gift giving was situated in a larger network of reciprocal gift exchanges that included other methods of giving gifts."

He notes that Facebook gifts were replacements for offline gifts about half the time. "We found that 58% of givers said they still would have likely given that person a gift if they hadn't used Facebook, but 42% reported it would have been difficult to give a gift without the Facebook gift option. So, there was some substitution happening for gifts from other channels as well as Facebook gifts being incremental gifts that would not otherwise have occurred."

Eckles points out that age was another factor in online gift giving on Facebook. "Much of the gifting was from people around the same age, but there also was a substantial amount from non-Millennials to Millennials. That may indicate the expectation by older people that younger people are more comfortable receiving gifts on a social media platform."

The highest levels for gift giving both before and after receiving a birthday gift on Facebook were for people between the ages of 45-64. The age group most likely to have the largest effect from having received a gift on Facebook were between 35-44. "This suggests that the stereotype of early adopters always being younger is not correct. We found that older people seemed to be using this gift giving service more, and those receiving a gift were then more likely to give gifts."

"This study provides credible evidence for the spread of cooperative behavior, revealing the cascading effects of receiving a gift," says Eckles.

Eckles is a coauthor of "Social Influence and Reciprocity in Online Gift Giving" with René Kizilcec of Stanford University and Cornell University and Eytan Bakshy and Moira Burke of Facebook. Eckles and Kizilcec were employees of Facebook when the data was collected. Eckles has a significant financial interest in Facebook and GoFundMe. The paper will be published in the Proceedings of the SIGCHI Conference on Human Factors in Computing Systems (CHI).

The MIT Sloan School of Management is where smart, independent leaders come together to solve problems, create new organizations, and improve the world. Learn more at mitsloan.mit.edu.