Are Gifts and Loans between Households Voluntary?
Using village data from Tanzania, we test whether gifts and loans between households are voluntary while correcting for mis-reporting by the giving and receiving households.� Two 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 that corrects for response bias.� Our testing strategy is based on the idea that, if lending 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 link 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.
|Date of creation:||01 Jun 2010|
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