ECONOMIC INSTITUTIONS

If you have been given

something, is it expected for
you to return the favor? Why
or Why Not?
ECONOMIC INSTITUTIONS
A company or organization that deals with
money or managing the distribution of money,
goods, and services in an economy. Examples
are banks, government organization, and
investment funds.
Reciprocity is a form
of gift exchange
between two parties
wherein return is
expected after product
or gift giving. (Parry,
1986).
IN SOCIOLOGY

It is defined as the a system of voluntary exchange among

individuals based on the understanding that the giving of favor
by one will be reciprocated in the future either to the giver or to
someone else.
Example:
Filipinos practice “utang na loob.” This act is part of our
culture. When a person shows you an act of kindness, it is a
must for Filipinos to return the favor.
IN ECONOMICS

It is defined as an exchange of equal advantages.

Example:
Japan and Philippines made an economic agreement to
remove traveling restrictions to flourish the tourism of
both countries.
TYPES OF RECIPROCITY

What are the types of

reciprocity?
1. GENERALIZED
 Generalized reciprocity is giving
something without the anticipation of an
instant return.
 Example:
 When a friend gave you a birthday gift, it
is not expected that you will also give that
friend a gift in return on the same day,
although it is anticipated that you will give
him a gift or token sometime in the future
or when his birthday comes.
 2. BALANCED
Balanced reciprocity is giving out of
something with the anticipation of immediate
return
Example:
When you get something from the store and
walks out without paying for the goods, you
will be stopped by shop employees because
you have not reciprocated with money the
goods that you picked from the store.
3. NEGATIVE

Negative reciprocity occurs when the exchange of

something already involves taking advantage of
someone or the situation. Most of the time, this
type of exchange involves trickery, intimidation, or
hard bargaining.
GAME: RAISE YOUR FLAG!
 Instructions:
1. The first group to raise
their flag will answer the
question.
2. Start your statement with
“I believe, the answer
is…”
3. The first group to get 5
points will be declared as
winner.
 QUESTIONS!

1. 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.  What type of reciprocity is
this?
2. If you go to the home of relatives or close friends on Christmas and give them
Christmas gifts, there is an expectation that you will receive gifts in return at the
same time.  What type of reciprocity is this?
3. It is a company or organization that deals with money or managing the distribution
of money, goods, and services in an economy.
QUESTIONS!
4. A medical scholar is expected to render “return of service” when he or she graduate
and get the license. What type of reciprocity is this?

5. It is giving out of something with the anticipation of immediate return?

6. 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. What type of reciprocity is this?
7. It is a form of gift exchange between two parties wherein return is
expected after product or gift giving?
8. Employee or employees perform poorly in the office even though they
are fully compensated. What type of reciprocity is this?
9. When a friend gave you a birthday gift. What type of reciprocity is this?
10. When you get something from the store and walks out without paying
for the goods, you will be stopped by shop employees because you have not
reciprocated with money the goods that you picked from the store.
PRACTICAL APPLICATION
TRY IT!

Compare and contrast generalized from balanced

reciprocity. Give examples for each.
2. TRANSFER

1. Banking: Moving funds

among two or more accounts held
by the same or different entities.
TRANSFER

2. Real estate:
Conveyance of title to a
property from the seller to
the buyer through a deed
of transfer, following
payment of the price.
TRANSFER

3. Securities trading: Delivery of a stock

(share) certificate by the seller's broker to the
buyer's broker followed by conveyance of the
title by recording the change in the stock
(share) register.
3. REDISTRIBUTION

It is the act of the

government to
distribute income from
the wealthy businesses
and citizens to the less
wealthy (Mares, 2014)
4. MARKET TRANSACTIONS

The exchange of goods and services through a

market. The set of market transactions taking place
in the economy is most important in terms of
measuring gross domestic product (GDP).
MARKET TRANSACTIONS: PURCHASES

Buyer and seller interact

with one another to
exchange goods for an
amount of money
(Arcinas & Mactal,
2016).
MARKET TRANSACTIONS: LOANS

•Loans are money

advanced to a business
with an interest charge
that must be paid and
returned at some point
in the future (Peavler,
n.d.)
5. MARKETS AND STATES
5. MARKETS AND STATES
The market:
It is an institution comprised of rules for controlling
voluntary transactions under the parameter of prices.

The state:
In contrast, the state is an institution consisting of a set of
rules for governance.
A market is the organization that coordinates the
production and consumption of goods and services
through voluntary transactions. By definition,
transactions in the market are voluntary, based upon the
free will of buyers and sellers. The market is, therefore,
the organization to coordinate people’s activities in
seeking self-interest towards increasing social and
economic welfare.
In contrast, the state is an organization for monopolizing its
coercive power. By using this power, the state coordinates
people’s activities according to its own fixed set of rules and
regulations. As part of those rules, the state enforces
consumption of resources through such measures as taxation
and military power, irrespective of an individual’s will, while
taking responsibility for providing such public goods as national
defense, police and roads which cannot be supplied by the
market.
ACTIVITY
Economic Realization
•Capture a recent economic
activity in your vicinity and make a
“HUGOT” out of that certain
scenario.