Altruism Vs. Exchange In Intergenerational Transfers: New Evidence From Children'S Health Care

We put in perspective two competing hypothesis on the nature of intergenerational transfers: altruism vs. exchange motivation. Unlike previous approaches, we concentrate on non-monetary transfers measured as the effort that parents need to make in order to prevent children?s fatal health episodes. It is shown that, under the pure altruism hypothesis richer parents should be more prompt than poorer ones to exert this effort in the face of a bad-health signal. Inversely, richer parents would need to observe a higher signal than poorer when parents consider raising healthy children as an investment for the future times. Using data on frequency of utilization of the emergency room services and doctor?s office visits by low-age children, infant mortality and home-accident preventive care, we reject the null of altruism. Instead, we conclude that exchange motives do not enter into contradiction with the evidence.