Prospect Theory and Migrant Remittance Decision Making
33 Pages Posted: 5 Sep 2012
Date Written: August 10, 2012
Foreign migrant remittances are a growing phenomenon in international financial flows yet are barely mentioned in discussions in international finance. The growth in migrant remittances to the developing world in the past decade amounted to $332 billion in 2010 and is forecast to reach $467 billion in 2014. A number of economic and ethical theories have been suggested in the literature to explain migrant remittance decisions. This paper argues that prospect theory offers a better understanding of migrant remittance decisions than the current theories in the extant literature.
Keywords: prospect theory, migrant remittances, loss averse, frame of reference
JEL Classification: D64, F22, F24, G15
Suggested Citation: Suggested Citation