Monetary Transfers Research Articles

The Effects of Incentivizing Early Prenatal Care on Infant Health

We investigated the effects of the timing of early prenatal care on infant health by exploiting a reform that required expectant mothers to initiate prenatal care during the first ten weeks of gestation to obtain a one-time monetary transfer paid after childbirth. Applying a difference-in-differences design to individual-level data on the population of births and fetal deaths, we identified small but statistically significant positive effects of the policy on neonatal health. We further provide suggestive evidence that improved maternal health-related knowledge and behaviors during pregnancy are plausible channels through which the reform might have affected fetal health.

Costly verification in collective decisions

We study how a principal should optimally choose between implementing a new policy and maintaining the status quo when information relevant for the decision is privately held by agents. Agents are strategic in revealing their information; the principal cannot use monetary transfers to elicit this information, but can verify an agent's claim at a cost. We characterize the mechanism that maximizes the expected utility of the principal. This mechanism can be implemented as a cardinal voting rule, in which agents can either cast a baseline vote, indicating only whether they are in favor of the new policy, or make specific claims about their type. The principal gives more weight to specific claims and verifies a claim whenever it is decisive.

The Impact of Pensions and Private Transfers on Rural Poverty in Brazil

Combining different data sources to create a balanced panel of rural state units of analysis, we estimate the impact of pensions (public) and inter-household (private) monetary transfers on the dynamics of rural poverty in Brazil between 1996 and 2015. We combine data from the Brazilian National Household Survey and administrative data from State Statistics Bureaus, in order to estimate a Generalized Method of Moments-System dynamic panel model for poverty. Controlling for demographic composition, GSP (Gross State Product) agricultural share, GSP share to GNP (Gross National Product), educational attainment, unemployment rate, and land concentration, we focus on how pensions and inter-household transfers, as well as their interaction, affected the dynamics of poverty in the rural contemporary Brazil through an increase in the investment capacity of households. Our results show a significant and positive impact of both transfers on poverty dynamics, with scale dominance for the retirement income. Despite controls used, poverty persistence is still significant in contemporary rural Brazil, suggesting that both transfers, even when combined, are limited to fight the structural component of poverty.

Food Insecurity Among Older Adults: A Multilevel Analysis of State-Level Interventions.

Objective: To analyze whether state-level social programs for older adults (OAs) in Mexico are associated with a reduction: (a) in the prevalence of severe food insecurity (SFI) and (b) in the magnitude of the effect of municipal marginalization on SFI. Method: Cross-sectional study based on urban OAs (65-100 years) from the 2010 census. Three-level logistic multilevel regression models were estimated to explain SFI. Results: Controlling for individual and municipal characteristics, states with social programs for OAs are generally associated with lower SFI prevalences (odds ratio [OR] = 0.68 [0.48, 0.95]) and mitigate the effect of marginalization on SFI when compared with states with no programs. Compared with in-kind food programs and voucher-based programs, monetary transfers are associated with a significant reduction in SFI prevalence (OR = 0.68 [0.46, 0.99]). Conclusion: States with programs for OAs, mainly monetary transfers, are associated with lower SFI prevalences.

DO WELFARE RECEIPTS CROWD OUT PRIVATE TRANSFERS FROM FAMILIES AND FRIENDS? EVIDENCE FROM PANEL DATA IN CHINA

Many countries are undergoing an unprecedented challenge to provide financial support to the older generation and guarantee their livelihood and wellbeing. China is no exception. Rural older adults in China have been becoming even more vulnerable to lack of care and inadequate financial resources as the growth of urbanization and labor migration has intensified. Therefore, it becomes increasingly difficult to follow the traditional family support model for the aged. Using the panel data of the China Health and Retirement Longitudinal Study 2011, 2013, and 2015 and a system generalized methods of moment (GMM), this paper examined the dynamic relationship between welfare receipts and monetary transfers from families and friends among rural and urban older adults (n=9,496) in China. The results show that the welfare receipts do not induce any “crowd-out” or “crowd-in” effects on rural older adults’ private transfer receipts. The incidence and amount of private transfers that occurred among rural older adults are more likely to be determined by the private transfers they received in prior waves. The intensity of catastrophic health expenditure itself does not affect the occurrence and size of private transfers. This study, on the one hand, confirms that among rural recipients, public transfers do not substitute private transfers, which most of the policymakers have long been concerned about. However, on the other hand, it also reveals the shortcoming of current public transfer policies—the generosity of public transfers does not enable rural older adults to be financially independent of intra-family transfers.

Estimation, Data Generators, and Optimal Contract, A Robust Approach

This paper considers the problem of using monetary transfers to incentivize data generation in data markets. A principal who collects multiple agents' (data generators') data to estimate the unknown state by a fixed estimator attempts to use a data-dependent transfer to incentivize high-quality data generation. The fact that the outcome of the estimation, the prediction error, is not contractable creates difficulty for incentive control even if there is unlimited liability. I propose a contract using subsample estimation to discipline agents' behavior that can implement the first-best actions under mild conditions, for example, if the principal uses a linear unbiased estimator. The implementation result is robust even if the principal has no knowledge about agents' belief structures and worries about strategic uncertainty. The informational robustness makes it possible to apply the result in the joint design problem, where the estimator is endogenously chosen, under a Bayesian or minimax objective.

Estimating the Determinants of Remittances Originating from US Households Using CPS Data

The USA is the largest source country of worldwide remittances. This paper is the first to use Current Population Survey data to estimate the determinants of remittances originating from the USA for a diverse set of approximately 3800 households with at least one foreign-born worker. We employ a gravity model examining the role of various push, pull, and distance factors. Most notably, higher household earnings push monetary transfers abroad: We estimate an average earnings elasticity in the range of 0.20–0.30. Remittances are more responsive to earnings in households with more adult women relative to men.

On the Pacific Salmon Treaty*

Abstract This paper studies the optimal design of the Pacific Salmon Treaty, which was signed by the U.S. and Canada in 1999 to share salmon on the Pacific coast. Moral hazard exists because countries may steal from each other. If a country’s observed output is suspiciously too high, the treaty either reduces the country’s future share, or asks the country to make a monetary transfer to its opponent. A calibrated version of our model shows that it is optimal for the U.S. to pay Canada $328.93 million every 30.78 years. Switching to the optimal contract improves the total welfare by 1.55%.

Reciprocity through ratings: An experimental study of bias in evaluations

This paper studies the potential for ratings of seller quality to be influenced by side payments to raters. In a laboratory setting, we find that even modest side payments from sellers to raters have large effects, with the type of rating (favorable or unfavorable) given to a seller determined primarily by how large a monetary transfer the seller makes to the rater. Our results demonstrate that side payments can crowd out a rater’s concern for buyers, even in situations where there is no potential for long-term relationship building.

A Shapley-based Groves mechanism: when the mechanism designer plays the wise man

We define two mechanisms. The first one implements the Shapley value to define some monetary transfers, but it is not incentive compatible. The second one implements only in expectation the same solution and it is a Groves mechanism. While inheriting all the properties of this family, it is also budget-balanced (still in expectation). The trick is to ask the mechanism designer to insert/remove some utility and to take/give it back at the end.

Parental Income and Wealth Loss and Transfers to Their Young Adult Children

As young people transition to adulthood, many rely on financial support from their parents to complete schooling and to live independently. Evidence suggests that there has been a gradual lengthening of the time young adults take to transition to adulthood. Young people attempting to move out of their parents' home, complete college, or enter the workforce during the Great Recession faced uncertain economic times, increasing their need for financial support. At the same time, the income and wealth losses experienced by young adults' parents may have disrupted transfers from them. We analyze the impact of large and unexpected declines in parents' income and wealth during and immediately after the Great Recession on monetary transfers to their young adult children using data from the Panel Study of Income Dynamics (PSID) and the PSID Transition to Adulthood study. We find parents' financial support of their young adult children declined during the Great Recession. The likelihood of receiving a transfer declined from 74% in 2005 to 57% in 2009. Parents' loss of income was a factor in the amount of decrease but on average was relatively modest - a $10,000 parental income loss decreased transfers to their adult children by $109. However, parents experiencing large declines in income, those at the 75th and 95th percentile of income loss, reduced transfers to adult children by $1,150 and $1,700, respectively. Declines in parental transfers that reduce college completion rates, increase student loan debt and decrease likelihood of homeownership may have long term consequences for financial well-being.

Notions of anonymity for object assignment: impossibility theorems

We search for impartiality in the allocation of objects when monetary transfers are not possible. Our main focus is anonymity. The standard definition requires that if agents’ names are permuted, their assignments be permuted in the same way. Since no rule satisfies this definition, we introduce weaker variants, “anonymity for distinct preferences,” “pairwise-anonymity for distinct preferences,” “pairwise-anonymity for fully differentiated profiles,” and “independence of others’ permutations.” We show that for more than two agents and two objects, no rule is pairwise-anonymous for distinct preferences and Pareto-efficient (Theorem 1), no rule is pairwise-anonymous for distinct preferences and independent of others’ permutations (Theorem 2), and no rule is pairwise-anonymous for fully differentiated profiles and strategy-proof (Theorem 3).

Effect of the human development bonus on health and education expenditure in Ecuador using propensity score matching

The objective of this research is to evaluate the effect of the Human Development Bonus on health and education spending in Ecuador using Propensity Score Matching. We use microdata obtained from the 2013-2014 Living Conditions Survey published by the National Institute of Statistics and Census of Ecuador. We estimate two sets of models. In the first, we estimate OLS regressions, where the dependent variable is the amount spent on health and education and the independent variable is whether or not the person receives the Human Development Bonus. In the second, using discrete choice models, we estimate the effect of receiving the BDH on the probability that a person spends on education and health. In order to reduce the bias produced by the non-comparability of the data, we compare the results with PSM and without PSM between those who receive the transfer and those who do not. The results show that BDH beneficiaries spend less on health and education than those who do not. These results are consistent with the incorporation of a set of control variables related to the socioeconomic characteristics of the families. A possible policy implication based on our results is that the conditioned monetary transfer is not fulfilling the objectives of its creation. Consequently, social policies should guarantee that this type of programs are not an instrument of dependence that limits the capacities of people because this prevents the reduction of poverty and inequality.

Scrip Economies Are Fair and (Approximately) Efficient

In many settings, resources are allocated among agents repeatedly over time without the use of monetary transfers: consider, for example, allocating server-time to company employees, rooms to students, or food among food banks. Here, the central challenge is to allocate resources efficiently despite the absence of payments. In this work we study a simple online variant of the standard Fisher market, where we endow all agents with a budget of artificial credits, and then repeatedly run simultaneous first-price auctions for each item in each period. Owing to their simplicity, such mechanisms have been gaining in popularity, with several recent successful implementations, most notably, by Feeding America for US food banks. Our goal in this paper is to understand the incentive and efficiency properties of these mechanisms. Our main contribution in this work is to show that such simple mechanisms enjoy strong performance guarantees under minimal rationality assumptions. Formally, we consider a dynamic allocation setting, where multiple items are available in each period, and each agent’s preference is a fractionally subadditive (XOS) valuation function, drawn independently from some underlying distributions. Agents start with some initial endowment of credits, and in each round, participate in simultaneous first-price auctions for each item. We benchmark the performance this mechanism against widely-adopted solution concepts from the literature on bargaining. In particular, we show that irrespective of the strategies of other agents, each agent can obtain a 1/2 − o(1) approximation of their ideal utility, i.e., the utility they derive from their favorite allocation subject to giving other agents their share (proportional to initial endowments) of the items. We do this by providing a lower-bound on the maximum value of each agent in the mechanism. Our results provide strong argument for a wider adoption of artificial currency mechanisms in several ways. First, our guarantees have frugal strategic and informational requirements – agents do not need to know the preferences or strategies of other participants in order to secure a half of their ideal utility. Second, the performance guarantees are independent of the cardinality of the type-space, and agnostic of the underlying type distributions. Finally, our results also yield operational insights into how the principal can choose the appropriate credit endowments in order to target a particular ideal utility profile.

Optimal Multi-unit Allocation with Costly Verification

A principal has n homogeneous objects to allocate to I > n agents. The principal can allocate at most one good to an agent and each agent values the good. Agents have private information about the principal’s payoff of allocating the goods. There are no monetary transfers but the principal can costly check any agent’s value. We characterize the mechanism which maximizes the principal’s net expected payoff. Such an optimal mechanism is a hybrid between two extremes. One extreme allocates the goods efficiently, i.e., to the $n$ agents who have the highest values, which requires agents being checked and leads to very high checking cost; the other incurs no checking cost by allocating without learning agents' value, which results in very large allocation inefficiency. The optimal mechanism balances the benefit of efficiency and the cost of checking. Moreover, it is easy to implement. We also compare the optimal mechanism with an alternative mechanism that allocates the goods one by one, where the single-good optimal mechanism is used in each step. The optimal mechanism dominates such an alternative in a particular way: Under any value profile, the two mechanisms allocate the goods to the same set of agents, but the optimal mechanism checks agents less frequently.

Dominance of contributions monitoring in teams

In team problems it has been previously argued that there is no loss to the principal from monitoring team output compared to monitoring of individual contributions, a result known as monitoring equivalence. Optimal output monitoring, however, sometimes required up front payment from the agents to the principal. By introducing limited liability (LL) on the part of agents that rules out positive monetary transfers to the principal, it is shown that the principal strictly benefits by monitoring individual contributions. Positive rent of the lowest type under output monitoring with LL implies there will be a dominating contributions monitoring contract that further transfers some of this rent to the principal. Thus, unlimited agent liability is necessary for the equivalence result.

The turn to optional familialism through the market: Long‐term care, cash‐for‐care, and caregiving policies in Europe

AbstractCash‐for‐care (CfC) schemes are monetary transfers to people in need of care who can use them to organize their own care arrangements. Mostly introduced in the 1990s, these schemes combine different policy objectives, as they can aim at (implicitly or explicitly) supporting informal caregivers as well as increasing user choice in long‐term care or even foster the formalization of care relations and the creation of care markets. This article explores from a comparative perspective, how CfC schemes, within broader long‐term care policies, envision, frame, and aim to condition informal care, if different models of relationships between CfC and informal care exist and how these have persisted or changed over time and into which directions. Building on the scholarly debate on familialization vs. defamilialization policies, the paper proposes an analytical framework to investigate the trajectories of seven European countries over a period of 20 years. The results show that, far from being simply instruments of supported familialism, CfC schemes have contributed to a turn towards “optional familialism through the market,” according to which families are encouraged to provide family care and are (directly or indirectly) given alternatives through the provision of market care.

Size Versus Truthfulness in the House Allocation Problem

We study the House Allocation problem (also known as the Assignment problem), i.e., the problem of allocating a set of objects among a set of agents, where each agent has ordinal preferences (possibly involving ties) over a subset of the objects. We focus on truthful mechanisms without monetary transfers for finding large Pareto optimal matchings. It is straightforward to show that no deterministic truthful mechanism can approximate a maximum cardinality Pareto optimal matching with ratio better than 2. We thus consider randomised mechanisms. We give a natural and explicit extension of the classical Random Serial Dictatorship Mechanism (RSDM) specifically for the House Allocation problem where preference lists can include ties. We thus obtain a universally truthful randomised mechanism for finding a Pareto optimal matching and show that it achieves an approximation ratio of frac{e}{e-1}. The same bound holds even when agents have priorities (weights) and our goal is to find a maximum weight (as opposed to maximum cardinality) Pareto optimal matching. On the other hand we give a lower bound of frac{18}{13} on the approximation ratio of any universally truthful Pareto optimal mechanism in settings with strict preferences. By using a characterisation result of Bade, we show that any randomised mechanism that is a symmetrisation of a truthful, non-bossy and Pareto optimal mechanism has an improved lower bound of frac{e}{e-1}. Since our new mechanism is a symmetrisation of RSDM for strict preferences, it follows that this lower bound is tight. We moreover interpret our problem in terms of the classical secretary problem and prove that our mechanism provides the best randomised strategy of the administrator who interviews the applicants.

Optimal Bayesian Mechanisms Without Monetary Transfers: A Solution to the Two-Person Implementation Problem

We study the relationship between two-agent implementation problems and the notion of interim efficiency due to Holmstrom and Myerson (1983) in Bayesian environments with private values and independent types. We present a general property, Bayesian efficiency, and show that it is sufficient for implementation of social choice functions. We also show that this condition is sufficient for implementation of social choice sets under a weak domain restriction - in particular, no economic condition is required. As an application, we show that the generalized two-person Nash bargaining solution, due to Myerson (1984), is Bayesian efficient.

Catastrophic risk associated with out-of-pocket payments for long term care in Spain

ObjectivesThis study analyses the financial burden associated with the introduction of copayment for long-term care (LTC) in Spain in 2012 for dependent individuals. Material and methodsWe analyse and identify households for which the dependency-related out-of-pocket payment exceeds the defined catastrophic threshold (incidence), and the gap between the copayment and the threshold for the catastrophic copayment (intensity), for the full population sample and for subsamples based on the level of long-term care dependency and on regional characteristics (regional income and political ideology of party ruling the region). ResultsThe results obtained show there is a higher risk of impoverishment due to copayment among relatively well-off dependents, although the financial burden falls more heavily on less well-off households. Our findings also reveal interesting regional patterns of inequity in financing and access to long-term care services, which appear to be explained by an uneven development of LTC services (monetary transfers versus formal services) and varying levels of copayment across regions. ConclusionsThe new copayment for long-term care dependency in Spain is an important factor of catastrophic risk, and more attention should be addressed to policies aimed at improving the progressivity of out-of-pocket payments for LTC services within and between regions. In addition, formal services should be prioritised in all regions in order to guarantee equal access for equal need.