Recipient Time-Inconsistency in Remittance Spending
Migrants and remittance recipients frequently differ in their intertemporal spending preferences, leading recipients to prioritize immediate gratification over high-return future investments like education.
Picture this
Imagine sending money to a relative with the plan that they buy an annual computer pass for school. Because present temptations are immediate while educational rewards take years to materialize, the relative spends the cash on instant daily comforts instead of the long-term investment.
What the evidence says
Baseline survey evidence reveals that 55% of migrants want more influence over the overall household budget in the Philippines, and 37% specifically desire more control over remittance spending decisions due to divergent preferences between senders and receivers.
- Who
- N = 501 Filipino migrant workers in Rome (73% female, median age 42, median monthly income 900 €).
- How
- Behavioral framework analysis linked to baseline survey data measuring intra-household decision dynamics and desire for budget control.
What to do
Structure remittance transfers with built-in temporal or category constraints to counter recipient bias toward immediate consumption over long-term educational investments.
From the source
"Since the returns to schooling occur in the future, while costs occur in the present, impatient or time-inconsistent remittance receivers may be tempted to spend money on items that bring immediate benefits."
Directing remittances to education with soft and hard commitments: Evidence from a lab-in-the-field experiment and new product take-up among Filipino migrants in Rome