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Are gifts and loans between households voluntary?

  • Margherita Comola
  • Marcel Fafchamps

Using village date from Tanzania, we test whether gifts and loans between households are voluntary while correcting for mis-reporting by the giving and receiving households. Tow maintained assumptions underlie our analysis: answers to a question on who people would turn to for help are good proxies for willingness to link: and, conditional on regressors, the probability of reporting a gift or loan is independent between giving and receiving households. Building on these assumptions, we develop a new estimation methodology and gift giving are voluntary, then both households should, want to rely on each other for help. We find only weak evidence to support bilateral formation. We do, however, find reasonably strong evidence to support unilateral link formation. Results suggest that if a household wishes to enter in a reciprocal relationship with someone who is sufficiently close socially and geographically, it can do so unilaterally.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2010-20.

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Date of creation: 2010
Date of revision:
Handle: RePEc:csa:wpaper:2010-20
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  1. Marcel Fafchamps & Margherita Comola, 2009. "Testing Unilateral and Bilateral Link Formation," Economics Series Working Papers CSAE WPS/2009-13, University of Oxford, Department of Economics.
  2. Marcel Fafchamps & Susan Lund, . "Risk Sharing Networks in Rural Philippines," Working Papers 97014, Stanford University, Department of Economics.
  3. Siwan Anderson, 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Econometric Society World Congress 2000 Contributed Papers 1323, Econometric Society.
  4. Stefan Dercon & Joachim de Weerdt, 2004. "Risk-Sharing Networks And Insurance Against Illness," Development and Comp Systems 0409019, EconWPA.
  5. Ethan Ligon & Jonathan P Thomas & Tim Worrall, 1997. "Informal Insurance Arrangements in Village Economies," CRIEFF Discussion Papers 9705, Centre for Research into Industry, Enterprise, Finance and the Firm.
  6. Mark Rosenzweig & Andrew D. Foster, 1995. "Imperfect Commitment, Altruism, and the Family: Evidence from Transfer Behavior in Low-Income Rural Areas," Home Pages _075, University of Pennsylvania.
  7. Anderson, K.S. & Baland, J-M., 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Discussion Paper 2000-83, Tilburg University, Center for Economic Research.
  8. Hayami, Y & Platteau, J-P, 1997. "Resource Endowments and Agricultural Development : Africa vs. Asia," Papers 192, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  9. Arcand, Jean-Louis & Fafchamps, Marcel, 2012. "Matching in community-based organizations," Journal of Development Economics, Elsevier, vol. 98(2), pages 203-219.
  10. repec:pse:psecon:2009-30 is not listed on IDEAS
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