Altruism, price judgement by tourists and livelihoods of informal crafts traders

Abstract

This paper aims to evaluate how prices are formed in the informal tourism market and how this has a bearing on the livelihoods of informal traders. More specifically, the objectives of this research were to: (i) determine the dependence and strategies of informal traders on sales and fair prices for their livelihood; (ii) assess price judgement of tourists in two currencies and (iii) determine whether altruism influences price judgement. A mixed-methods approach was followed, where interviews were held with informal craft traders and a questionnaire was electronically administered to 450 international tourists who visited South Africa. The results show that the informal craft traders are supporting extended family members in southern African countries. The informal tourism economy in South Africa therefore plays an integral part in providing a source of livelihood for many migrants. In addition, tourists have inaccurate price judgements, which is more pronounced for lower valued items, and leads to price distortions in the market. We also find that price judgement in the unfamiliar currency distorts the effect of pro-social behaviour on price judgement, with higher levels of altruism only being associated with price overvaluations in the respondent’s home currency.