Mental Accounting and Remittances: A Study of Malawian Households
AbstractIn this paper we use a behavioural approach to studying household consumption behaviour in Malawi. In particular we are interested to know whether households use mental accounting when consuming different categories of good. It is useful for assessing the impact of remittances on household consumption behaviour. We use 1998 cross-sectional data to find the following key results: (i) mental accounting systems are in operation. Remittance income exhibits a high marginal propensity to save, (ii) household income influences consumption habits, (iii) receipt of remittance income impacts on saving and spending habits. This is in line with the theory of remittances and corresponding mental accounting theory, and, finally, (iv) both remittances and loans are used for consumption smoothing and investment purposes.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 3603.
Date of creation: Oct 2006
Date of revision:
Remittances; Household Behaviour; Consumer Economics; Economic Development; Africa; Malawi;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D1 - Microeconomics - - Household Behavior
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-AFR-2007-06-23 (Africa)
- NEP-ALL-2007-06-23 (All new papers)
- NEP-CBE-2007-06-23 (Cognitive & Behavioural Economics)
- NEP-DEV-2007-06-23 (Development)
- NEP-MFD-2007-06-23 (Microfinance)
- NEP-MIG-2007-06-23 (Economics of Human Migration)
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