Optimal management of transfers: an odd paradox

Jean-Philippe Platteau, François Bourguignon

Résultats de recherche: Contribution à un journal/une revueArticle

6 Downloads (Pure)

Résumé

This paper considers the case of transfers when there exists a serious preference misalignment between the transfer-maker and the beneficiary. The former wants to reduce the resulting outcome discrepancy through monitoring the use of the transfer and imposing sanctions if the discrepancy proves too large. This external discipline combines with the ’internal discipline’ of the beneficiary, that is his/her willingness and ability to align with the transfer-maker's objective. Besides the fact that costs of monitoring and sanctioning are explicitly taken into account, an original feature of our model specification is that the two types of discipline are made comparable: they can be summed up to obtain an aggregate discipline. We show that, paradoxically, an (exogenous) improvement of internal discipline may be over-compensated by a fall of external discipline. Total discipline thus decreases and the discrepancy between the actual and the intended uses of the transfer increases instead of decreasing. Another consequence is that the relationship between internal and total disciplines may be non-monotonic. These results generalize to alternative specifications of the basic model.

langue originaleAnglais
Pages (de - à)143-157
Nombre de pages15
journalJournal of Public Economics
Volume162
Les DOIs
étatPublié - 1 juin 2018

Empreinte digitale

Paradox
Optimal management
Discrepancy
Monitoring
Sanctions
Willingness
Model specification
Misalignment
Costs

Citer ceci

Platteau, Jean-Philippe ; Bourguignon, François. / Optimal management of transfers : an odd paradox. Dans: Journal of Public Economics. 2018 ; Vol 162. p. 143-157.
@article{0d46f175b7b543e6b2ccf0c948de31e1,
title = "Optimal management of transfers: an odd paradox",
abstract = "This paper considers the case of transfers when there exists a serious preference misalignment between the transfer-maker and the beneficiary. The former wants to reduce the resulting outcome discrepancy through monitoring the use of the transfer and imposing sanctions if the discrepancy proves too large. This external discipline combines with the ’internal discipline’ of the beneficiary, that is his/her willingness and ability to align with the transfer-maker's objective. Besides the fact that costs of monitoring and sanctioning are explicitly taken into account, an original feature of our model specification is that the two types of discipline are made comparable: they can be summed up to obtain an aggregate discipline. We show that, paradoxically, an (exogenous) improvement of internal discipline may be over-compensated by a fall of external discipline. Total discipline thus decreases and the discrepancy between the actual and the intended uses of the transfer increases instead of decreasing. Another consequence is that the relationship between internal and total disciplines may be non-monotonic. These results generalize to alternative specifications of the basic model.",
keywords = "transfer, preference misalignment, incentives, aid, Incentives, Transfer, Aid, Preference misalignment",
author = "Jean-Philippe Platteau and Fran{\cc}ois Bourguignon",
year = "2018",
month = "6",
day = "1",
doi = "10.1016/j.jpubeco.2018.01.001",
language = "English",
volume = "162",
pages = "143--157",
journal = "Journal of Public Economics",
issn = "0047-2727",
publisher = "Elsevier",

}

Optimal management of transfers : an odd paradox. / Platteau, Jean-Philippe; Bourguignon, François.

Dans: Journal of Public Economics, Vol 162, 01.06.2018, p. 143-157.

Résultats de recherche: Contribution à un journal/une revueArticle

TY - JOUR

T1 - Optimal management of transfers

T2 - an odd paradox

AU - Platteau, Jean-Philippe

AU - Bourguignon, François

PY - 2018/6/1

Y1 - 2018/6/1

N2 - This paper considers the case of transfers when there exists a serious preference misalignment between the transfer-maker and the beneficiary. The former wants to reduce the resulting outcome discrepancy through monitoring the use of the transfer and imposing sanctions if the discrepancy proves too large. This external discipline combines with the ’internal discipline’ of the beneficiary, that is his/her willingness and ability to align with the transfer-maker's objective. Besides the fact that costs of monitoring and sanctioning are explicitly taken into account, an original feature of our model specification is that the two types of discipline are made comparable: they can be summed up to obtain an aggregate discipline. We show that, paradoxically, an (exogenous) improvement of internal discipline may be over-compensated by a fall of external discipline. Total discipline thus decreases and the discrepancy between the actual and the intended uses of the transfer increases instead of decreasing. Another consequence is that the relationship between internal and total disciplines may be non-monotonic. These results generalize to alternative specifications of the basic model.

AB - This paper considers the case of transfers when there exists a serious preference misalignment between the transfer-maker and the beneficiary. The former wants to reduce the resulting outcome discrepancy through monitoring the use of the transfer and imposing sanctions if the discrepancy proves too large. This external discipline combines with the ’internal discipline’ of the beneficiary, that is his/her willingness and ability to align with the transfer-maker's objective. Besides the fact that costs of monitoring and sanctioning are explicitly taken into account, an original feature of our model specification is that the two types of discipline are made comparable: they can be summed up to obtain an aggregate discipline. We show that, paradoxically, an (exogenous) improvement of internal discipline may be over-compensated by a fall of external discipline. Total discipline thus decreases and the discrepancy between the actual and the intended uses of the transfer increases instead of decreasing. Another consequence is that the relationship between internal and total disciplines may be non-monotonic. These results generalize to alternative specifications of the basic model.

KW - transfer

KW - preference misalignment

KW - incentives

KW - aid

KW - Incentives

KW - Transfer

KW - Aid

KW - Preference misalignment

UR - http://www.scopus.com/inward/record.url?scp=85044303400&partnerID=8YFLogxK

U2 - 10.1016/j.jpubeco.2018.01.001

DO - 10.1016/j.jpubeco.2018.01.001

M3 - Article

VL - 162

SP - 143

EP - 157

JO - Journal of Public Economics

JF - Journal of Public Economics

SN - 0047-2727

ER -