Altruism or exchange: what motives inter-household transfers in Burkina Faso?

Abstract

Purpose The economic literature identifies two families of motives for private transfers: altruism and exchange. Altruistic models postulates that transfers are unselfish assistance to vulnerable and poor households. Exchange models, however, explain transfers as temporary assistance to households with the expectation of being paid back. The purpose of this paper is to analyze the motives of inter-households transfers in Burkina Faso and identify which model better explains observed transfers’ decisions. The findings can be useful to provide a information on the profile of households receiving and donating transfers and a better understanding of their roles in local communities. Design/methodology/approach The paper uses a nationally representative household survey in Burkina Faso that collects detailed information on inter-household transfers. It combines descriptive analysis with various econometric models to identify the type of behavior that better explain the receipt and donation of private transfers. To account for the non randomness of the receipt and donation of transfers in the population, the study estimates a Heckman model to address selection bias. Findings Preliminary analyses suggest that one-third of households have participated in transfers’ exchange, either as recipients or donors with the amount received or given representing a substantial share of household income or expenditure. The econometric analyses show that the primary driver of the receipt of transfers is households’ degree of vulnerability. This result indicates that altruism is the underlying model explaining the receipt of transfers. However, the authors also find that affluent households tend to give and receive larger amounts of money suggesting that some elements of exchange are also at play. Originality/value The analysis contributes to a large and growing literature on migration, transfers, and remittances in developing countries. It provides insights into the motives of these non-market transactions in the specific context of Burkina Faso, a developing country, where migration and transfers have been historically important social behaviors. The analysis makes an effort to address the potential bias resulting from households’ self-selection into the donation or receipt of transfer. The findings shed additional light on the double role of transfer as a safety net for the vulnerable and social insurance for the non-poor.