Altruism, Insurance, and Costly Solidarity Commitments

67 Pages Posted: 4 Dec 2019

See all articles by Christopher B. Barrett

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management

Vesall Nourani

Massachusetts Institute of Technology (MIT)

Eleonora Patacchini

Cornell University

Thomas F. Walker

World Bank; Cornell University

Date Written: November 2019

Abstract

Inter-household transfers play a central role in village economies. Whether understood as informal insurance, credit, or social taxation, the dominant conceptual models used to explain transfers rest on a foundation of self-interested dynamic behavior. Using experimental data from households in rural Ghana, where we randomized private and publicly observable cash payouts repeated every other month for a year, we reject two core predictions of the dominant models. We then add impure altruism and social taxation to a model of limited commitment informal insurance networks. The data support this new model's predictions, including that unobservable income shocks may facilitate altruistic giving that better targets less-well-off individuals within one's network, and that too large a network can overwhelm even an altruistic agent, inducing her to cease giving.

Suggested Citation

Barrett, Christopher B. and Nourani, Vesall and Patacchini, Eleonora and Walker, Thomas F. and Walker, Thomas F., Altruism, Insurance, and Costly Solidarity Commitments (November 2019). Available at SSRN: https://ssrn.com/abstract=3496637

Christopher B. Barrett (Contact Author)

Cornell University - Charles H. Dyson School of Applied Economics & Management ( email )

315 Warren Hall
Ithaca, NY 14853-7801
United States
607-255-4489 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://aem.cornell.edu/faculty_sites/cbb2/

Vesall Nourani

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Eleonora Patacchini

Cornell University ( email )

Ithaca, NY 14853
United States

Thomas F. Walker

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Cornell University ( email )

Department of Economics
414 Uris Hall
Ithaca, NY 14853-7601
United States

HOME PAGE: http://sites.google.com/a/cornell.edu/thomaswalker/

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