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Tough love or unconditional charity?

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  • Spiros Bougheas
  • Indraneel Dasgupta
  • Oliver Morrissey

Abstract

Charitable giving increasingly requires recipients to undertake costly prior action. A common justification is that willingness to undertake costly actions signals greater productivity from transfers. We demonstrate that, if the distribution of recipient types is unknown, recipient costs indivisible and productivity unobservable, conditional charity, once instituted, may not yield information adequate to refute its efficiency claim. Consequently, donors who inefficiently provide conditional charity will not correct themselves. Donors who wrongly provide unconditional charity may however subsequently correct themselves. This offers grounds for scepticism regarding efficiency claims for conditional charity. We also provide reasons for encouraging donor competition and indicator targeting. Copyright 2007 , Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 59 (2007)
Issue (Month): 4 (October)
Pages: 561-582

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Handle: RePEc:oup:oxecpp:v:59:y:2007:i:4:p:561-582

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  1. Banerjee, A.V., 1997. "A Theory of Misgovernance," Working papers 97-4, Massachusetts Institute of Technology (MIT), Department of Economics.
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  8. Allan Drazen, 2002. "Conditionality and Ownership in IMF Lending: A Political Economy Approach," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 36-67.
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  10. Drazen, Allan, 2002. "Conditionality and Ownership in IMF Lending: A Political Economy Approach," CEPR Discussion Papers 3562, C.E.P.R. Discussion Papers.
  11. Guriev, Sergei, 2004. "Red tape and corruption," Journal of Development Economics, Elsevier, vol. 73(2), pages 489-504, April.
  12. Nyarko, Yaw, 1990. "Learning In Mis-Specified Models And The Possibility Of Cycles," Working Papers 90-03, C.V. Starr Center for Applied Economics, New York University.
  13. Giulio Federico, 2004. "Aid and Policies under Weak Donor Conditionality," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 13(3), pages 395-416, September.
  14. Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February.
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Cited by:
  1. Sanjay Jain, 2007. "Project Assistance versus Budget Support: An Incentive-Theoretic Analysis of Aid Conditionality," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(4), pages 694-719, December.
  2. Burger, Ronelle & Dasgupta, Indraneel & Owens, Trudy, 2014. "Why Pay NGOs to Involve the Community?," IZA Discussion Papers 8051, Institute for the Study of Labor (IZA).
  3. Dasgupta, Indraneel & Mukherjee, Diganta, 2014. "Assimilation, Criminality and Ethnic Conflict," IZA Discussion Papers 7924, Institute for the Study of Labor (IZA).
  4. Burger, Ronelle & Dasgupta, Indraneel & Owens, Trudy, 2011. "A Model of NGO Regulation with an Application to Uganda," IZA Discussion Papers 6221, Institute for the Study of Labor (IZA).
  5. Audun Langørgen, 2011. "Targeting public services through the unequal treatment of unequals," International Tax and Public Finance, Springer, vol. 18(2), pages 193-213, April.
  6. Ruxanda Berlinschi, 2010. "Reputation concerns in aid conditionality," The Review of International Organizations, Springer, vol. 5(4), pages 433-459, December.
  7. Paul Clist & Alessia Isopi & Oliver Morrissey, 2012. "Selectivity on aid modality: Determinants of budget support from multilateral donors," The Review of International Organizations, Springer, vol. 7(3), pages 267-284, September.

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