IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/halshs-03558286.html
   My bibliography  Save this paper

Altruism Networks, Income Inequality, and Economic Relations

Author

Listed:
  • Yann Bramoullé

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Rachel E Kranton

    (Duke University [Durham])

Abstract

What patterns of economic relations arise when people are altruistic rather than strategically self-interested? This paper introduces an altruism network into a simple model of choice among partners for economic activity. With concave utility, agents effectively become inequality averse towards friends and family. Rich agents preferentially choose to work with poor friends despite productivity losses. Hence, network inequality-the divergence in incomes within sets of friends and family-is key to how altruism shapes economic relations and output. Skill homophily also plays a role; preferential contracts and productivity losses decline when rich agents have poor friends with requisite skills.

Suggested Citation

  • Yann Bramoullé & Rachel E Kranton, 2022. "Altruism Networks, Income Inequality, and Economic Relations," Working Papers halshs-03558286, HAL.
    • Handle: RePEc:hal:wpaper:halshs-03558286
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03558286
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-03558286/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Vásquez, Jorge & Weretka, Marek, 2020. "Affective empathy in non-cooperative games," Games and Economic Behavior, Elsevier, vol. 121(C), pages 548-564.
    3. Francis Kramarz & Oskar Nordström Skans, 2014. "When Strong Ties are Strong: Networks and Youth Labour Market Entry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(3), pages 1164-1200.
    4. Avinash Dixit, 2003. "Trade Expansion and Contract Enforcement," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1293-1317, December.
    5. Prendergast, Canice & Stole, Lars, 2001. "The non-monetary nature of gifts," European Economic Review, Elsevier, vol. 45(10), pages 1793-1810, December.
    6. Dean Karlan & Markus Mobius & Tanya Rosenblat & Adam Szeidl, 2009. "Trust and Social Collateral," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1307-1361.
    7. Morten Bennedsen & Kasper Meisner Nielsen & Francisco Perez-Gonzalez & Daniel Wolfenzon, 2007. "Inside the Family Firm: The Role of Families in Succession Decisions and Performance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(2), pages 647-691.
    8. Matthew O. Jackson & Tomas Rodriguez-Barraquer & Xu Tan, 2012. "Social Capital and Social Quilts: Network Patterns of Favor Exchange," American Economic Review, American Economic Association, vol. 102(5), pages 1857-1897, August.
    9. Andrew D. Foster & Mark R. Rosenzweig, 2001. "Imperfect Commitment, Altruism, And The Family: Evidence From Transfer Behavior In Low-Income Rural Areas," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 389-407, August.
    10. Kaivan Munshi & Mark Rosenzweig, 2016. "Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap," American Economic Review, American Economic Association, vol. 106(1), pages 46-98, January.
    11. Matthew S. Goldberg, 1982. "Discrimination, Nepotism, and Long-Run Wage Differentials," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(2), pages 307-319.
    12. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
    13. Calvo-Armengol, Antoni & Jackson, Matthew O., 2007. "Networks in labor markets: Wage and employment dynamics and inequality," Journal of Economic Theory, Elsevier, vol. 132(1), pages 27-46, January.
    14. Renaud Bourlès & Yann Bramoullé & Eduardo Perez‐Richet, 2017. "Altruism in Networks," Econometrica, Econometric Society, vol. 85, pages 675-689, March.
    15. H. Peyton Young & Mary A. Burke, 2001. "Competition and Custom in Economic Contracts: A Case Study of Illinois Agriculture," American Economic Review, American Economic Association, vol. 91(3), pages 559-573, June.
    16. Bloch, Francis & Genicot, Garance & Ray, Debraj, 2008. "Informal insurance in social networks," Journal of Economic Theory, Elsevier, vol. 143(1), pages 36-58, November.
    17. Simone Galperti & Bruno Strulovici, 2017. "A Theory of Intergenerational Altruism," Econometrica, Econometric Society, vol. 85, pages 1175-1218, July.
    18. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162, January.
    19. Debraj Ray & Rajiv Vohra, 2020. "Games of Love and Hate," Journal of Political Economy, University of Chicago Press, vol. 128(5), pages 1789-1825.
    20. Bedoor K. AlShebli & Talal Rahwan & Wei Lee Woon, 2018. "The preeminence of ethnic diversity in scientific collaboration," Nature Communications, Nature, vol. 9(1), pages 1-10, December.
    21. Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vásquez, Jorge & Weretka, Marek, 2021. "Co-worker altruism and unemployment," Games and Economic Behavior, Elsevier, vol. 130(C), pages 224-239.
    2. Renaud Bourlès & Yann Bramoullé & Eduardo Perez-Richet, 2021. "Altruism and Risk Sharing in Networks," Journal of the European Economic Association, European Economic Association, vol. 19(3), pages 1488-1521.
    3. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    4. Renaud Bourlès & Juliette Rouchier, 2012. "Evolving Informal Risk-Sharing Cooperatives and Other-Regarding Preferences," Working Papers halshs-00793706, HAL.
    5. Victorien Barbet & Renaud Bourlès & Juliette Rouchier, 2020. "Informal risk-sharing cooperatives: the effect of learning and other-regarding preferences," Journal of Evolutionary Economics, Springer, vol. 30(2), pages 451-478, April.
    6. Ruiz-Palazuelos, Sofía & Espinosa, María Paz & Kovářík, Jaromír, 2023. "The weakness of common job contacts," European Economic Review, Elsevier, vol. 160(C).
    7. Jorge Vasquez & Marek Weretka, 2020. "Co-worker altruism and unemployment," GRAPE Working Papers 55, GRAPE Group for Research in Applied Economics.
    8. Matthew Elliott & Arun Chandrasekhar & Attila Ambrus, 2015. "Social Investments, Informal Risk Sharing, and Inequality," 2015 Meeting Papers 189, Society for Economic Dynamics.
    9. Attila Ambrus & Markus Mobius & Adam Szeidl, 2014. "Consumption Risk-Sharing in Social Networks," American Economic Review, American Economic Association, vol. 104(1), pages 149-182, January.
    10. Blumenstock, Joshua E. & Eagle, Nathan & Fafchamps, Marcel, 2016. "Airtime transfers and mobile communications: Evidence in the aftermath of natural disasters," Journal of Development Economics, Elsevier, vol. 120(C), pages 157-181.
    11. Attila Ambrus & Arun G. Chandrasekhar & Matt Elliott, 2014. "Social Investments, Informal Risk Sharing, and Inequality," NBER Working Papers 20669, National Bureau of Economic Research, Inc.
    12. Lenel, Friederike, 2021. "Expected neediness and the formation of mutual support arrangements: Evidence from the Philippines," University of Göttingen Working Papers in Economics 427, University of Goettingen, Department of Economics.
    13. Putman, Daniel S., 2020. "The Scope of Risk Pooling," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304480, Agricultural and Applied Economics Association.
    14. Francis Bloch & Bhaskar Dutta & Stéphane Robin & Min Zhu, 2016. "The formation of partnerships in social networks," Post-Print halshs-01421347, HAL.
    15. Wang, Ruixin, 2016. "Who Should I Share Risk with? Gifts can tell : Theory and Evidence from Rural China," Other publications TiSEM 95c6dbed-3f49-4d5a-987e-2, Tilburg University, School of Economics and Management.
    16. Ingela Alger & Jörgen W. Weibull, 2019. "Evolutionary Models of Preference Formation," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 329-354, August.
    17. Boosey, Luke & Mark Isaac, R., 2016. "Asymmetric network monitoring and punishment in public goods experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 26-41.
    18. Balmaceda, Felipe & Escobar, Juan F., 2017. "Trust in cohesive communities," Journal of Economic Theory, Elsevier, vol. 170(C), pages 289-318.
    19. Oguzhan Celebi, 2023. "Substitutability in Favor Exchange," Papers 2309.10749, arXiv.org.
    20. Christine Binzel & Dietmar Fehr, 2010. "Social Relationships and Trust," Working Papers 542, Economic Research Forum, revised 09 Jan 2010.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-03558286. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.