Altruism, Favoritism, and Guilt in the Allocation of Family Resources: Sophie’s Choice in Mao’s Mass Send-Down Movement May 2009

Is it possible to identify behavior motivated by guilt? Although there are empirical findings on inter-household transfers consistent with the hypothesis that people care about others’ state of well-being (altruism), the psychological literature on guilt suggests that transfers may also reflect compensation by one agent to another for prior harmful acts, given the harmed agent’s current well-being. There is little evidence of guilt-motivated behavior, however. In this paper, we use new survey data on twins born in urban China, among whom many experienced the consequences of the forced mass rustication movement of the Chinese “cultural revolution,” to identify the distinct roles of altruism and guilt in affecting behavior within families. In particular, we exploit the fact that many families were forced to select one of their adolescent children to be “sent down.” We show the conditions under which guilt and altruism can be separately identified using such data and find that parents behaved altruistically, providing more gifts at the time of marriage to the sibling with lower earnings and schooling, but also exhibited guilt – given the subsequent income and education of the two children and despite the evident positive effects of rustication on earnings and political connections, the child experiencing more years of rustication received significantly higher transfers from the parents when married. These results thus provide some empirical foundation for theoretical models that use guilt or morality to explain human behavior and suggest that the guilt motive should be considered in the design of contracts where enforcement and commitment issues, such as in the family, are important.