A mixed-motives model of private transfers with subjectively-assessed recipient need: Evidence from a poor, transfer-dependent economy

Brown, Richard P. C. and Jimenez, Eliana V. (2008). A mixed-motives model of private transfers with subjectively-assessed recipient need: Evidence from a poor, transfer-dependent economy. Discussion Paper Discussion Paper 365, School of Economics, The University of Queensland.

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Author Brown, Richard P. C.
Jimenez, Eliana V.
Title A mixed-motives model of private transfers with subjectively-assessed recipient need: Evidence from a poor, transfer-dependent economy
School, Department or Centre School of Economics
Institution The University of Queensland
Series Discussion Paper
Report Number Discussion Paper 365
Publication date 2008-05
Start page 1
End page 16
Total pages 16
Language eng
Subject 340210 Welfare Economics
1402 Applied Economics
Abstract/Summary We extend the mixed-motives model of transfer derivatives developed by Cox et al (2004) introducing subjectively-assessed recipient need in place of an absolute income threshold at which the donor’s dominant motive switches from altruism to exchange. This refinement provides a theoretically justifiable threshold amenable to empirical measurement. We test the extended model with customized survey data from Tonga and find evidence consistent with Cox et al in support of altruism for households below the threshold, but, we also find a positive, exchange-motivated relationship for those above the threshold. We conclude that either crowding-out or crowding-in of private transfers can occur when the recipient’s welfare improves, depending on the household’s pre-transfer welfare level. This also has implications for the distributional impact of private transfers and could explain why poverty reduction can be accompanied by increased income inequality. JEL classification: D13; D64; F24; H55; I30; O15;
Keyword Altruism
Crowding-out
Crowding-in
Subjective welfare
Private transfers
Exchange

Document type: Working Paper
Collection: Discussion Papers (School of Economics)
 
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Created: Mon, 02 Jun 2008, 15:30:46 EST by Belinda Weaver on behalf of School of Economics