Working Paper: CEPR ID: DP14148
Authors: Christopher Barrett; Vesall Nourani; Eleonora Patacchini; Thomas Walker
Abstract: Inter-household transfers play a central role in village economies. Whetherunderstood as informal insurance, credit, or social taxation, the dominant concep-tual models used to explain transfers rest on a foundation of self-interested dynamicbehavior. Using experimental data from households in rural Ghana, where we ran-domized private and publicly observable cash payouts repeated every other month fora year, we reject two core predictions of the dominant models. We then add impurealtruism and social taxation to a model of limited commitment informal insurancenetworks. The data support this new model's predictions, including that unobserv-able income shocks may facilitate altruistic giving that better targets less-well-offindividuals within one's network, and that too large a network can overwhelm evenan altruistic agent, inducing her to cease giving.
Keywords: altruism; insurance; solidarity; interhousehold transfers
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| public income shocks (H29) | interhousehold transfers (G59) |
| private income shocks (D31) | interhousehold transfers (G59) |
| public income shocks (H29) | shutdown of giving behavior (D64) |
| private income shocks (D31) | transfers to neediest members (I38) |
| network size (D85) | shutdown of giving behavior (D64) |