Daily Collectors, Public Good Provision and Private Consumption: Theory and Evidence from Urban Benin

Daily collectors operate worldwide; they charge a fee in exchange for the collection of their client's deposits. The clients recover their savings after one month. With a negative nominal return of -3.3% per month, the service is quite expensive but nonetheless prevalent among the very poor. The economic literature so far emphasizes two motives for making deposits: (i) it is safer than bringing the money home, (ii) people want to commit to save. I argue that in addition to these two motives, people make deposits in order to reduce their contribution to the household's expenses and increase their private consumption. This intra-household motive is first modelled and then tested using a unique panel data set collected in Benin. The panel structure of the data allows me to isolate the effect of the third motive. Additionally, I show that daily collectors enable women to make more gifts to their children and acquaintances, and allow men to reduce those gifts and their participation to household's public goods. There is large positive effect of the deposits on people's purchase of new clothes, and making deposits increases women's expenditures on frivolous goods by 200% to 300%. Finally, the commitment motive appears to be an important determinant of men's deposits.Intra-household, deposit collectors, micro-savings, non-cooperative household's members, public good provision, commitment

Elite Capture Through Information Distortion: Uniformly Distributed Signal

Common wisdom as well as well-grounded analytical arguments suggest that stronger punishment of deviant behavior meted out by a principal typically prompts the agents to better conform with his objectives. Addressing the specific issue of donor-beneficiary relationships in the context of participatory development programs, we nevertheless show that greater tolerance on the part of donors may, under certain conditions, favor rather than hurt the interests of the poor. Also, greater uncertainty surrounding the donor's knowledge regarding the poor's preference may have the same paradoxical effect. Critical features of our framework are: (i) communities are heterogeneous and dominated by the local elite in dealing with external agencies, (ii) the elite choose the project proposed to the donor strategically, knowing that the latter has a certain amount of tolerance toward elite capture and an imperfect knowledge of the poor's priorities.community-driven development, aid effectiveness, elite capture, corruption, preference targeting.