Development of Social Preferences for Informal Risk Sharing: An Experimental Approach with Colombian Children

Pooja Balasubramanian,  Daniel Celis  and Marcela Ibanez

We trace the development of risk-sharing norms among school-age children in Colombia using panel data. We find a substantial degree of solidarity, measured as the proportion of children who transfer income to members of the group affected by an idiosyncratic negative income shock. Altruism is an essential risk-sharing motivation and develops early in life to remain relatively stable afterward. Image concerns have a relatively minor role in explaining risk sharing. Generalized reciprocity is not apparent for very young children and is evident only after 10, while strategic motives are observed only for children older than 15. Children do not display deservingness norms, and on the contrary, older children tend to decrease the value transferred when the other participant’s loss is higher.