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Altruism and Risk Sharing In Development Contexts

Paper Session

Friday, Jan. 6, 2017 1:00 PM – 3:00 PM

Swissotel Chicago, Montreux 2
Hosted By: Association for the Study of Generosity in Economics
  • Chair: Daniel Hungerman, University of Notre Dame

The Effect of Social Pressure on Expenditures in Malawi

Jessica Goldberg
,
University of Maryland

Abstract

I vary the observability of a windfall payment to 294 members of agricultural clubs in rural Malawi in order to study the effect of social pressure on timing of expenditures. While other studies have documented that social pressure affects the quantity of income and consumption, I focus on timing because spending money quickly may be a strategy for reducing obligatory transfers. Such a shift in timing is welfare reducing if it reduces consumption smoothing or the ability to search for better prices, or leads to greater spending on temptation goods. Respondents who receive money in the presence of their agricultural club spend 30 percent more in the week immediately following the payment than those who receive equivalent transfers in private settings. There is no overall change in the composition of spending, but some evidence that social pressure to share windfall income has a larger effect on poorer households.

Experimental Evidence on Other-Regarding Preferences in Partnership Formation

Michele Belot
,
University of Edinburgh
Marcel Fafchamps
,
Stanford University

Abstract

We study how other-regarding behavior vary across two decision contexts: when subjects make a pure allocation decision; and when they pick a partner. In both settings each subject is decision is final, as in a dictator game; and it affects their payoff and that of other subjects in the same way under both settings. We find that that subjects are less likely to sacrifice their own material wellbeing to increase that of others when selecting a partner in a large anonymous setting than when dividing a pie ó even though the consequences on the material payoffs of others are identical. We interpret this differences as suggesting the application of different norms or heuristics: a pure allocation decision between four individuals including oneself resembles the decisions people make within a household, where norms of gift exchange and fairness apply; a partner selection decision resembles the decisions people make when competing for mates, where the pursuit of self-interest is acceptable.

Asymmetric Information and Remittances: Evidence From Matched Administrative Data

Thomas Joseph
,
Indian Institute of Management Udaipur
Yaw Nyarko
,
New York University
Shing-Yi Wang
,
University of Pennsylvania

Abstract

Using new large-scale, administrative data matching remittances and monthly payroll disbursals, we demonstrate how migrants' earnings in the United Arab Emirates affect their remittances. We consider several types of income changes: Ramadan, weather shocks, a labor reform and returns to time in the UAE. We demonstrate that two key characteristics of the income changes that affect the income elasticity of remittances are the observability of the income and whether the income change is positive or negative. The results are consistent with a private information model where remittances are viewed as payments in an income-sharing contract.
Discussant(s)
Laura Schechter
,
University of Wisconsin-Madison
Pamela Jakiela
,
University of Maryland
Kevin Donovan
,
University of Notre Dame
JEL Classifications
  • D6 - Welfare Economics
  • O1 - Economic Development