Intra-Household Preference Asymmetry

In Simple Words

Imagine a parent living in another city who sends money home specifically wanting it put into a college savings bucket, while the family living back home wants to spend the cash immediately on daily groceries. Because the parent cannot monitor spending at the store, the friction and disagreement make the parent hold back on sending extra money.

Research question

Migrants and remittance beneficiaries in home countries frequently disagree on how transmitted funds should be allocated across consumption and investment. When migrants lack mechanisms to monitor or enforce spending preferences from afar, overall remittance transfers decline.

Participants

4,458 Filipino migrant workers in Dubai and Sharjah, UAE, paired with recipient households in the Philippines.

Study Design

Randomized controlled trial and baseline survey elicitation comparing migrant spending preferences with recipient household expenditure patterns.

Results

Baseline survey data demonstrates that migrants favor long-term investment (education, housing) while beneficiaries favor immediate consumption; unmonitored preference asymmetry reduces baseline remittances (averaging 1,311 AED per month) below potential capacity.

Takeaway

Elicit and compare sender and recipient spending priorities prior to financial product deployment to identify structural alignment gaps in cross-border transfers.

Read alongside the research

Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Baseline

The starting measurements in a study. Researchers use these to compare what participants were like at the start with what happens later.

ExampleBefore a training programme starts, researchers measure workers’ earnings. That first measurement is the baseline.

GET-IT glossary · Baseline characteristics ↗Read more about baseline →

Randomized controlled trial

A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.

ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.

GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →

Related findings

• Communication Cost Substitution Channel →Development

  Instead of placing an expensive international phone call every time you send money home to explain what it is for, you send a free automated text message attached directly to the transfer notification, saving you money on your mobile phone bill.

• Exogenous Remittance Expansion and Household Human Capital Accumulation →Development

  When currency values shift abroad, an overseas worker suddenly gets a pay raise in terms of their home country's currency without changing their job. Families receiving this unexpected extra cash use it to keep children in school longer, start small businesses, and permanently lift themselves out of poverty.

• Kinship Target Beneficiary Invariance →Development

  Think of sending a text message with spending instructions to a parent versus a younger sibling; while social norms regarding parental authority might suggest migrants communicate differently with parents, empirical testing reveals the messaging feature yields the same transfer response regardless of who receives it.

• Independence of Youth Opportunity Effects from Maternal Bargaining Power →Development

  Imagine a family garden where carrots start getting watered more. Is it because the mother took control of the watering hose, or because everyone in the family realized carrots can now be sold for double the price at market?