Is There Such a Thing as a Family Constitution? A Test Based on Credit Rationing

Abstract

The paper aims to ascertain whether voluntary money transfers may be explained by theexistence of self-enforcing family constitutions. We identify a circumstance in which an agentwill behave differently if she is optimizing subject to a family constitution, than if she is movedby either altruistic or exchange motivations. The circumstance is the presence of a bindingcredit ration, which may raise the probability of making a money transfer (and the amount ofmoney transferred) if a family constitution exists, but will have the opposite effect if thetransfer is either a gift, or payments for services rendered. Allowing for possible endogeneity,we find that rationing has a positive effect on the probability of giving money, and on theamount given, if the potential giver is under the age of retirement and has children, but nosignificant effect if the person has no children, or is over the retirement age. This rejects thehypothesis that money transfers are motivated by either altruistic or straight exchangemotives, but not the one that these transfers are governed by family constitutions.

Keywords: family constitution, altruism, exchange, private transfers, personal services

JEL Classification: D13, J13, J14