Template-type: ReDIF-Paper 1.0
Author-Name: Dietrich, Stephan
Author-Email: dietrich@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Author-Name: Beekman, Gonne
Author-Workplace-Name: Wageningen University
Author-Name: Nillesen, Eleonora
Author-Email: nillesen@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: Market integration and pro-social behaviour in rural Liberia
Abstract: There is a long-standing debate on whether access to markets may change 
	 pro-social preferences and as a result undermine informal support 
	 structures prevalent in many developing country settings. This study 
	 presents empirical evidence on the relation between market integration 
	 and pro-social behaviour among rural households in Liberia. This is 
	 particularly relevant in light of recent emphasis on promoting 
	 agricultural development through connecting small-scale farmers to 
	 markets and value chains. We use data from two lab-in-the-field 
	 experiments to measure preferences for altruism and fairness towards 
	 fellow villagers and traders from a provincial market and combine the 
	 experiments with household survey data. We define market integration as 
	 the share of consumption bought at the market. The regression analysis 
	 is based on Tobit and 2SLS Tobit models using chief characteristics and 
	 predicted food consumption expenditures as instrumental variables. Our 
	 study finds that increased levels of market integration have no robust 
	 impact on altruistic behaviour, as represented by amounts send in the 
	 dictator game, but are associated with lower offers in the ultimatum 
	 game. Our findings support the idea that market integration makes people 
	 act more economically rational, especially when matched with traders. 
	 The study provides new evidence that contrary to popular belief, markets 
	 do not crowd out norms of generosity or fairness, or lead to some sort 
	 of negative externality by changing norms and preferences but rather 
	 strengthen strategic considerations and behaviour.
Classification-JEL: A13, C93, O12
Keywords: market integration, altruism, fairness, lab-in the-field experiment, Liberia
Series: UNU-MERIT Working Papers
Creation-Date: 20180219
Number: 2018-010
File-URL: https://unu-merit.nl/publications/wppdf/2018/wp2018-010.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2018010