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NON-ECONOMIC
INSTITUTIONS
⊡ Are establishments not owned controlled by
the government
T H O N I R D S
I B U R T E I
ECONOMIC
INSTITUTIONS
⊡ are those that are involved in the production
and distribution of the goods and services
that members of a society need
⊡ is simply defined as an agency that has
established rules in the economic movement
within a given society. It plays a significant
role in redistributive aspect of our economy
through allocating and distributing available
resources fairly
Forms of
economic
institutions
1. RECIPROCITY
⊡ Reciprocity
involves exchanges
between two parties that are
similar in-kind and value. In simple
terms, it is like giving and
receiving gifts. All the social norms
that apply to gift-giving, applies
here as well.
Example
⊡ The dowry given by a
Muslim groom to his
prospective bride is a
transaction between two
socially equal parties having
the same status with regards
to values of goods or services.
⊡ Tantamount to the wealth
and educational attainment
possessed by the latter.
A. GENERALIZED
RECIPROCITY
⊡ This type of
reciprocity is usually
altruistic. The giver does
not expect anything in
return. The act of giving
is merely based on the
assumption that the
recipient would have
done the same thing.
In the Philippines, most often
than not, the eldest child
expresses generalized
reciprocity to his or her
family by graduating, and in
exchange, they will be
providing means to sustain
the academic needs of their
A. GENERALIZED
RECIPROCITY
⊡ However, you would likely be
mildly offended if he insisted on
buying you a cup of coffee at the
same time that you bought him
one. To do so would suggest
that he does not wish to become
involved in a continuing
reciprocal exchange with
you. In a sense, it is a rejection
of your token of friendship.
For example, if you are
shopping with a friend and
you buy him a cup of coffee,
you may expect him to buy
you one in return at some
time in the future.
B. BALANCE
RECIPROCITY
⊡ Balanced reciprocity
considers the value of
the exchange. It has the
expectation that the
receiver will return the
favor with something of
equal value.
⊡ there is an explicit
expectation of
immediate return
A brother and sister
exchanging birthday gifts or
taking each other out to eat
on their birthday. The
exchange is considered to be
equal because each
participant perceives a meal
or a gift as a balanced
B. BALANCE
RECIPROCITY
⊡ If you walk out of a store
without paying for the goods
that you have taken, you very
likely will be stopped by the
store employees and
possibly arrested because
you failed to immediately
reciprocate with the
appropriate amount of
money.
Simple barter or supermarket
purchases involve this
understanding.
C. NEGATIVE
RECIPROCITY
⊡ This involves an imbalance in
the exchange. When one
party is trying to get a better
deal than the other, it is
negative reciprocity.
⊡ occurs when there is an
attempt to get someone to
exchange something he or
she may not want to give up
or when there is an attempt to
get a more valued thing than
you give in return.
⊡ This may involve trickery,
coercion, or hard bargaining.
For instance, your neighbor may be offered a new
job in a distant city starting in two days. She
desperately needs to sell her car before she
leaves. It is nearly new and it cost her
$22,000. You offer her $10,000 which she
reluctantly accepts because there is no other
choice. Your taking advantage of her situation
resulted in negative reciprocity.
⊡ This is when the
D. MATERIAL/
FINANCIAL
RECIPROCITY
exchange involves
something materialistic
or financial. A good
example would be
loyalty or referral
programs where the
customer gets an
incentive for doing
something in return.
A good general example is when
you welcome a new neighbor to the
neighborhood by lending him a
washing machine. Such a neighbor
will feel obligated to reciprocate in
some way by also doing something
nice.
E. EMOTIONAL
RECIPROCITY
⊡ emotional reciprocity is
more nuanced than the
above. It is based on
psychological factors such
as recognition, or
appreciation. It can be a
simple thank you or an
acknowledgment that
makes the customer feel
appreciated. This influences
consumer behavior,
especially in
direct contact businesses.
This is when you make others feel
good or appreciated by saying
things like,
Thank you for your time.
It is my pleasure to meet you or
It was a great time to work with you.
2. TRANSFER
⊡ are payments that are made without any
good or service being received
in return
⊡ Transfers ensure that the members of
society will be given retirement, disability
benefits, insurance, scholarship, and
medical assistance.
3. REDISTRIBUTION
⊡ Is a form of exchange in which goods flow into a
central place where they are sorted, counted
and relocated.
⊡ is as an economic policy referring to the
movement of goods, wealth (income), or
services in the society. Redistribution happens by
taking income from those with higher incomes
and providing income to those with lower
incomes through social mechanisms in the
transfer of income such as charity, monetary
policies (tax collection), etc.
3. REDISTRIBUTION
Taxes are collected from
individuals based on their
income. The money
collected is distributed to
other members of
society through different
government programs.
Tax revenues finance government
activities, including public works
and services such as roads and
schools, or programs such as
Social Security and Medicare.
4. MARKET
EXCHANGE
⊡ An economic system in which goods and services are
produced, distributed, and exchanged by the forces of
price, supply, and demand.
⊡ Example: Farmers take their crops to a local market and sells
them to the public.
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T H O N I R D S
I B U R T E I
REDISTRIBUTION
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