Expectations of Longevity as a Predictor of Intra-family Transfers: An illustration from rural Malawi

In developing countries, individual livelihoods are threatened on a daily basis by exposure to shocks such as inflation, severe weather conditions and unstable markets while options for mitigation are limited. Individuals give resources typically financial to friends and family as a way to self-insure. This paper tests the reciprocity motive for transfer by examining how an individual’s survival expectation influences the amount they give in monetary transfer. To meet this goal, I apply an ordered logit model that utilizes data on respondents’ subjective estimates of the probability of death within a year to determine the likelihood of the size of monetary transfer they give to other family members. The theory of a ‘moral economy’ proposes that in infinitely repeated games an individual who does not expect that they will be around to gain at some point in the exchange interaction will not participate. As such, the expectation is that individuals who expect to die within a year will not transfer money to others. The findings from this study will have implications for the development of public safety nets programs, especially for areas with a high HIV prevalence rate as found in Malawi.