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Title:Transfers and development: Easy come, easy go? PDF Logo
Authors:Christiaensen, Luc
Pan, Lei
Issue Date:2010
Series/Report no.:Working paper // World Institute for Development Economics Research 2010,125
Abstract:Contrary to the popular notion that money that is easily earned, is also easily spent, economic theory holds that income is fungible. Drawing on the concept of mental accounting, this study theoretically explores when such a link between spending behaviour and the effort dispensed in obtaining income is plausible. Empirically, it is found that the marginal propensity to consume from unearned income is about three times larger than that from earned income, based on household panel data from rural China, with the difference more pronounced when unearned income is transitory and smaller than earned income. The policy implications are real.
Subjects:transfers
saving
mental accounting
permanent income hypothesis
China
JEL:D01
D11
D12
O12
ISBN:978-92-9230-363-1
Document Type:Working Paper
Appears in Collections:WIDER Working Papers, United Nations University (UNU)

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