When goods and services are given away, purchased, sold, or traded, there are potentially two components of the exchange–pure economic gain and social gain. Both of these motives usually occur at the same time in non-market economies. However, in market economies, the social component is often missing except when the exchange is between relatives or friends. With strangers, the social gain is usually sacrificed for efficiency and speed.
Some economic exchanges are intended to distribute a society’s wealth in a different way than exists at present. These are referred to as redistributive exchanges . They usually function as economic leveling mechanisms. In the Western World, charity and progressive income tax systems are examples of redistributive exchanges. Progressive income taxes are intended to make people with greater wealth give at higher rates than those at the bottom of the economic ladder. Some of the tax money is then allocated to help the poorer members of society. The intended net effect is to reduce or prevent extremes of wealth and poverty. When wealthier individuals in a society make charitable donations, it can have a similar effect. What the donors get in return may be a tax advantage, a relieved social conscience, and/or increased social status and recognition. Indeed, one of the main reasons that some very wealthy individuals make sure that their large charity donations are publicized is because of the public recognition that results.