bequests gifts and social security this paper analyses the very long run or stationary state impact of an unfunded social security system we use an overlapping generations model framework a key feature is that while parents care about their children and can leave non negative bequests to them children also care about their parents and can make non negative gifts to them we show that the possibility of negative net bequests may make social security less harmful to private wealth accumulation than would otherwise be the case a subsidiary finding is that risk loving behaviour may emerge for some households due to the nature of intergenerational transfers within family lines

altruism and time consistency the economics of fait accompli this paper analyzes the strategic and intertemporal interaction between two economic agents who have overlapping concerns such as altruistic concerns for each other s welfare the agents may be two individuals a social bureau and a client or two units in an organization we show how the presence of such common concerns may lead to socially inefficient outcomes in which one economic agent free rides on the other s concern we also briefly how this inefficiency and free riding in the context of interaction between individuals might be mitigated by compulsory social security systems as another example we interpret the inefficiency in terms of kornai s soft budget constraints within organizations

savings in transnational households a field experiment among migrants from el salvador abstract we implemented a randomized field experiment that tested ways to stimulate migrants savings in their origin country we find that migrants value opportunities to exert greater control over financial activities in their home countries we offered u s based migrants bank accounts in el salvador randomly varying migrant control over el salvador based savings by offering different accounts across treatments migrants offered the greatest degree of control accumulated the most savings impacts likely represent increases in total savings there is no evidence that savings increases were simply reallocated from other savings mechanisms enhanced control over home country savings does not affect remittances sent home

the response of real wages to unanticipated money growth abstract this paper investigates the response of real wages to unanticipated money growth in the light of equilibrium theories of the business cycle these theories in their main different versions do not deliver a common and unambiguous hypothesis on this issue while some models implu a countercyclical real wage response during monetary cycles others yield the opposite result of a procyclical real wage econometric analysis of annual and quarterly u s data reported in the paper indicates that there is a weak negative real wage response to an unanticipated increase in money growth

altruism within the family reconsidered do nice guys finish last this paper criticizes the view that altruism either increases the benefits of group interactions or improves the allocation of resources within families the authors identify a variety of circumstances in which members of a group would prefer to interact with less altruistic individuals and in which the efficiency of resource allocation is inversely related to the prevailing degree of altruism reasons that altruism might be a counter productive social force include 1 it can alter the social utility possibility frontier in surprising and sometimes unfortunate ways 2 it can entail exploitability causing family members to behave in ways that leave all parties worse off 3 altruists may take inefficient actions to preempt exploitation and 4 family members may establish efficient resource allocation by punishing selfish behavior a rise in the level of altruism may lead to the exclusion of certain punishment strategies on the grounds of credibility 1 general positive result is that sufficiently high levels of altruism almost always lead to efficient resource allocation one should not necessarily expect to find strong altruistic linkages between spouses nor should altruism necessarily contributed to marital stability in addition to the connections between this work and the literature on family behavior this analysis has broader implications concerning the role of altruism in society and the evolution of social conscience

are international remittances altruism or insurance evidence from guyana using multiple migrant households abstract while international remittances provide significant disposable income for many households in less developed countries there is no consensus on migrants remittance motivation two principal competing explanations for remittances are altruism and risk sharing this paper employs previously unanalyzed data to bring new evidence to the debate we develop a simple theoretical model that yields distinct testable predictions for each motivation among the model s testable predictions is differential remittance behavior by migrants from households with multiple versus single migrants under altruism and risk sharing our estimation finds significant differences in remittance behavior of multiple and single migrants and these differences support the altruistic incentive to remit

tied transfers and paternalistic preferences why do parents make inter vivos transfers to their children and leave them postmortem bequests 1 gary becker s notions of altruism 1981 ch 8 by which he means that children s utilities are arguments of their parents utility function provides one explanation denoting the children s utility functions by u ci where ci denotes consumption by child i the preferences of parents with two children can be represented by a utility function of the form w cp u1 c1 u2 c2 where cp is the parents own consumption 2 in the altruistic model parents sole motive for intergenerational transfers is to increase their children s utility in other models however parents may have nonaltruistic as well as altruistic motives for transferring resources to their children the literature on economic development emphasizes old age support as a motive for fertility and to a lesser degree as a motive for providing children with human capital as part of an explicit or implicit intergenerational contract when human capital formation is the primary focus of the analysis as in discussions of education and earnings it is useful to decompose inter vivos transfers into human capital formation and other inter vivos transfers such a decomposition can mislead in discussing intergenerational transfers however because it obscures the fact that the provision of human capital by parents constitutes an intergenerational transfer laurence kotlikoff and avia spivak 1981 analyze another old age support model one in which the family operates as an incomplete annuities market in their model children make regular transfers to their aging parents and the share that each child contributes to the parents determines his or her share of the parental estate although the prospect of old age support may be an important motive for downstream intergenerational transfers i e from parents to children in some societies in the united states today upstream transfers appear too small and too uncertain to make this motive credible to explain downstream transfers in the united states today economists have investigated other models in which parents have selfish as well as selfless motives for example b douglas bernheim andrei shleifer and lawrence summers propose a model in which parents use the prospect of bequests to exact services from their children we envision a testator who though altruistic is also affected by actions taken individually by a number of potential beneficiaries he may e g enjoy receiving attention from his children 1985 p 1046 bernheim et al assume that such actions increase parents utility and decrease children s utilities in their model the children s utility functions become u1 ai ci where ai denotes services the ith child provides the parents and the parents utility function becomes w cp al a2 ul al c1 u2 a2 ca to measure these services bernheim et al use frequency of contact i e visits plus telephone calls between parents and children this approach expands the concept of child services to include those provided by adult children who live outside the parents household in an attempt to explain bequests and inter vivos transfers child services originally appeared in discussions of fertility and the allocation of resources to young children living with their parents and thus tends to evoke the joys of young parenthood university of pennsylvania philadelphia pa 19104 and university of washington i am grateful to the national science foundation and the national institutes of health for financial support to gary becker samuel preston david stapleton and paul taubman for helpful comments and to judith farnbach for editonal assistance 1 even if bequests are unplanned as some versions of the life cycle savings model assume inter vivos transfers must be intentional 21 ignore the possible dependence of the children s utility on their own children s utility etc because it is not relevant to the issues discussed in this paper

altruism and beyond an economic analysis of transfers and exchanges within families and groups 1 introduction 2 altruism transfers and wellbeing 3 the timing of intergenerational transfers an implication 4 an exchange implication of transfers the demonstration effect 5 transfers by migrants a strategic motive for remittances 6 exchange with recognition costs an explanation of migrants performance 7 intrafamilial transfers and exchanges forming and sustaining altruism

monetary innovations capital taxation and real wage movements some new evidence central to many new classical macroeconomic models is the notion that unanticipated money growth affects real wages adversely while anticipated money growth is neutral to date however the empirical evidence on the subject has been mixed early studies of sargent and sims 29 and sims 30 reported that monetary surprises had a positive effect on real wages leiderman 18 however provided evidence consistent with the implications of these models the results of more recent studies have also been ambiguous koray 16 concludes that anticipated money growth has an adverse effect on total real wages but unanticipated money growth is neutral in contrast kim 15 finds that both anticipated and unanticipated money growth have negative effects on real wages one difficulty with these studies is the implicit assumption that real wage movements are primarily caused by aggregate demand disturbances in a recent paper sumner and silver 33 assert that real shocks can also have an important influence on real wages and should be taken into account

risk sharing across communities this paper studies cross community risk sharing there is now a large body of theoretical and empirical work on informal insurance where people mitigate risk by sharing income a consistent empirical finding is that risk sharing is not complete within villages often the observed sets of individuals 2 one reason researchers suspect is that risk sharing does not take place at the village level but between individuals and families 3 we build a theoretical model where risksharing takes place between pairs of agents there are idiosyncratic shocks to individual income and community level shocks we consider how the opportunity for cross community links affects the shape and efficiency of risk sharing arrangements we find that when links across villages form there can be less risk sharing within a village welfare is higher for those directly or indirectly connected across villages but lower for those with no path connecting them to the other village overall welfare can be higher thus empirical findings that insurance within a village is not complete is not necessarily evidence of an inefficient pattern of risk sharing relations rather the finding is consistent with risk sharing patterns that involve cross community relations and such patterns may yield higher aggregate welfare despite incomplete insurance within a village this paper makes two contributions first it demonstrates the importance of a network analysis by examining pairwise incentives to form relations and the resulting pattern we can see new risk sharing outcomes second with this network model we show how informal risk sharing across communities has both aggregate and distributional effects to study network outcomes we posit a simple two stage model first we provide a benchmark model for risk sharing for a given network then working backwards we consider incentives to form risk sharing links 4 to illustrate consider a rural population and ask how people might link

dynamic allocation in an altruistic overlapping generations economy abstract this paper is concerned with the issue does there exist a social security program which can be maintained period after period to address this issue the paper considers dynamic allocation in an altruistic overlapping generations economy the altruism is intergenerational nonpaternalistic and two sided it is assumed that generations coexisting in the same period agree on a social welfare function which evaluates the consumption of various generations and play a game against those living in different periods a perfect equilibrium of this game is shown to exist and its properties are examined journal of economic literature classification numbers c72 d62 h55

money and functional distribution of income this paper analyzes the role of money growth on functional income shares in the short run the analysis is conducted within the framework of an equilibrium model it is shown that a currently unperceived shock to money growth leads to an increase in both total wages and profits the empirical findings provide some support for the predictions of the model with respect to the role of unanticipated money growth but also find evidence about the significance of anticipated money growth copyright 1989 by ohio state university press

altruism in networks we provide the first analysis of altruism in networks agents are embedded in a fixed network and care about the well being of their network neighbors depending on incomes they may provide financial support to their poorer friends we study the nash equilibria of the resulting game of transfers we show that equilibria maximize a concave potential function we establish existence uniqueness of equilibrium consumption and generic uniqueness of equilibrium transfers we characterize the geometry of the network of transfers and highlight the key role played by transfer intermediaries we then study comparative statics a positive income shock to an individual benefits all for small changes in incomes agents in a component of the network of transfers act as if they were organized in an income pooling community a decrease in income inequality or expansion of the altruism network may increase consumption inequality

the structure of firms abstract this paper studies different organizational forms within a single framework the u form is modelled as a two round communication game between a principal and agents with unobservable efforts and adverse selection problems the m form is modelled by considering a one round communication game with pure adverse selection feasible and optimal mechanisms are characterized the profit functions are derived and an extension of hotelling s lemma proved in the absence of the control loss problems flowing form the unobservability of agent effort levels the u form will be superior to the m form both forms will be superior to the corrupted m form

pretending to be poor borrowing to escape forced solidarity in cameroon abstractfrom field observations of credit cooperatives in cameroon we find that 19 of the loans taken are fully collateralized by savings held in the same institutions this behavior is costly to the borrower as it represents a net interest payment of about 24 per year while traditional explanations may partly explain this behavior interviews with members of the cooperatives suggest the following new rationale members resort to borrowing to signal to friends and relatives that they are poor and do not have savings available by doing so they can avoid requests for financial help we develop a signaling model to analyze the conditions under which this behavior is an equilibrium outcome

motives for private income transfers private income transfers are becoming increasingly recognized as a key aspect of the u s economy the majority of private income transfers occur inter vivos i e between living persons but very little is known about this type of transfer behavior this paper tests alternative hypotheses concerning motivation for inter vivos transfers two motives are considered altruism and exchange evidence presented here casts doubt on the altruistic model of transfer behavior observed patterns for inter vivos transfers are more consistent with exchange related motives this finding has important implications for the effects of public transfer programs on the distribution of economic well being

kinship incentives and evolution we analyze how family ties affect incentives with focus on the strategic interaction between two mutually altruistic siblings the siblings exert effort to produce output under uncertainty and they may transfer output to each other with equally altruistic siblings their equilibrium effort is non monotonic in the common degree of altruism and it depends on the harshness of the environment we define a notion of local evolutionary stability of degrees of sibling altruism and show that this degree is lower than the kinship relatedness factor numerical simulations show how family ties vary with the environment and how this a ects economic outcomes

on the private provision of public goods on networks abstract this paper analyzes the private provision of public goods where consumers interact within a fixed network structure and may benefit only from their direct neighbors provisions we present a proof of the existence and uniqueness of a nash equilibrium for general networks and best reply functions in addition we investigate the neutrality result of warr 38 and bergstrom blume and varian 6 whereby consumers are able to undo the impact of income redistribution as well as public provision financed by lump sum taxes to this effect we show that the neutrality result has a limited scope of application beyond a special network architecture in the neighborhood of the set of contributors

social norms and gift behavior theory and evidence from romania in many developing and transitional countries with limited public income redistribution inter household transfers in general and gifts in particular are sizable and very important we use unique romanian survey data that enables us to isolate pure gifts from other private transfers we explicitly focus on the importance of community wide social norms and find that they indeed play a major role for both the occurrence and the values of gifts more exactly our results suggest that the overall predominant gift motive among romanian households is a norm of reciprocity moreover this norm seems to be dominating for gifts to middle and high income households even though poor households receive to the same extent norms of both impure altruism and reciprocity tend to be important hence although the poor may not reciprocate gifts to the same extent as the rich they still receive since there is a social norm to give especially to the poor