Hi, I appreciated your research into this, welcome to the forum and the EA community!
About 2
“There is no obligation to repay. Giving to those in need should not create an obligation for them to repay”
It seems like there is no obligation to repay shortly after, or for a specific incident. No ‘debt’ But there is an expectation that they will give in a similar instance of need by the giver, yes?
I’m struggling to think of a good case to practice/apply this system. Especially because I’m not sure it scales to larger societies, nor am I sure how to create norms around “need” and “obligation” where none were before. Or could it be written as a formal agreement? This is far outside my area-of-expertise so I really don’t have experience from which to draw examples of places this could be applied.
One flaw I can think of is that disaster risks tend to be localized. So if there is a bad year for crops, or a wildfire: chances are it hits both participant in the risk pool at the same time.
Can you explain why or which cases this is better than insurance for managing risk?
Hi EcologyInterventions, thanks for the welcome, and here are some thoughts/responses to your thoughtful questions:
Yes, there is an expectation that a need-based transfer partner will give if they are in similar circumstances (i.e., in need) in the future. But it is different from a debt/credit system, there is no keeping of accounts and paying back in need-based transfer systems. In need-based transfer systems people build relationships which essentially function as informal insurance systems. As in insurance systems, transfers only occur if certain conditions of need are met.
As for applying need-based transfers to large scale societies, there are some interesting existing examples. For instance, water sharing in the desert southwest: in Phoenix different regions can have water shortages and they transfer water among each other based on need. And also airline seat transfer systems: If an unexpected/uncontrollable situation happens like bad weather or equipment failure, airlines have agreements to sell each other seats well-below market rates to help reroute travelers.
There are also elements of need-based transfers that map onto how many people understand friendship. In fact, in my lab (in work led by my former graduate student, Jessica Ayers) we found that one of the main things that people expect from friends is that they will provide help in times of need.
Need-based transfers aren’t really an alternative to insurance; they are a type of informal and decentralized insurance that can potentially help to fill gaps that market-based insurance can’t fill or doesn’t fill as easily. One of the big advantages of need-based transfer systems is that they don’t require a lot of data (e.g., actuarial tables) in order to be viable for helping people manage a variety of risks. Instead, people build relationships with others based on an understanding of overall risk profiles, and generally agree to help each other in times of need.
You rightly point out that disasters can be localized and this can be a limitation of need-based systems. But interestingly, in our work in The Human Generosity Project, we see that people build these relationships often with people with different ecological conditions/risk. For example, the Maasai will have Osotua partners (Osotua is the Maasai need-based transfer system) who live in different regions. This helps to buffer against this risk of correlated shocks. Fijians, who deal with risks from cyclones (which often hit everyone in a village at the same time), build relationships among villages where whole villages essentially enter into these risk pooling/need-based transfer relationships with each other. We’ve written about these societies and their risk pooling systems in this chapter. We have also modeled correlated shocks in this paper if you’re interested in reading more about the technical side of these systems.
One other point of interest is that these need-based transfer relationships can start simply with a request for help. This is how it works among the Maasai, for example. If help is given after a prospective partner makes a request, then it starts a relationship of mutual obligation to help in times of need. It may very well work like this with some friendships in large-scale and market-based societies as well, with requests for need (and fulfillment of those requests) catalyzing new friendships that might function to help manage risk, even if people aren’t explicitly thinking about them in that way.
Hi, I appreciated your research into this, welcome to the forum and the EA community!
About 2 “There is no obligation to repay. Giving to those in need should not create an obligation for them to repay”
It seems like there is no obligation to repay shortly after, or for a specific incident. No ‘debt’ But there is an expectation that they will give in a similar instance of need by the giver, yes?
I’m struggling to think of a good case to practice/apply this system. Especially because I’m not sure it scales to larger societies, nor am I sure how to create norms around “need” and “obligation” where none were before. Or could it be written as a formal agreement? This is far outside my area-of-expertise so I really don’t have experience from which to draw examples of places this could be applied.
One flaw I can think of is that disaster risks tend to be localized. So if there is a bad year for crops, or a wildfire: chances are it hits both participant in the risk pool at the same time.
Can you explain why or which cases this is better than insurance for managing risk?
Hi EcologyInterventions, thanks for the welcome, and here are some thoughts/responses to your thoughtful questions:
Yes, there is an expectation that a need-based transfer partner will give if they are in similar circumstances (i.e., in need) in the future. But it is different from a debt/credit system, there is no keeping of accounts and paying back in need-based transfer systems. In need-based transfer systems people build relationships which essentially function as informal insurance systems. As in insurance systems, transfers only occur if certain conditions of need are met.
As for applying need-based transfers to large scale societies, there are some interesting existing examples. For instance, water sharing in the desert southwest: in Phoenix different regions can have water shortages and they transfer water among each other based on need. And also airline seat transfer systems: If an unexpected/uncontrollable situation happens like bad weather or equipment failure, airlines have agreements to sell each other seats well-below market rates to help reroute travelers.
There are also elements of need-based transfers that map onto how many people understand friendship. In fact, in my lab (in work led by my former graduate student, Jessica Ayers) we found that one of the main things that people expect from friends is that they will provide help in times of need.
Need-based transfers aren’t really an alternative to insurance; they are a type of informal and decentralized insurance that can potentially help to fill gaps that market-based insurance can’t fill or doesn’t fill as easily. One of the big advantages of need-based transfer systems is that they don’t require a lot of data (e.g., actuarial tables) in order to be viable for helping people manage a variety of risks. Instead, people build relationships with others based on an understanding of overall risk profiles, and generally agree to help each other in times of need.
You rightly point out that disasters can be localized and this can be a limitation of need-based systems. But interestingly, in our work in The Human Generosity Project, we see that people build these relationships often with people with different ecological conditions/risk. For example, the Maasai will have Osotua partners (Osotua is the Maasai need-based transfer system) who live in different regions. This helps to buffer against this risk of correlated shocks. Fijians, who deal with risks from cyclones (which often hit everyone in a village at the same time), build relationships among villages where whole villages essentially enter into these risk pooling/need-based transfer relationships with each other. We’ve written about these societies and their risk pooling systems in this chapter. We have also modeled correlated shocks in this paper if you’re interested in reading more about the technical side of these systems.
One other point of interest is that these need-based transfer relationships can start simply with a request for help. This is how it works among the Maasai, for example. If help is given after a prospective partner makes a request, then it starts a relationship of mutual obligation to help in times of need. It may very well work like this with some friendships in large-scale and market-based societies as well, with requests for need (and fulfillment of those requests) catalyzing new friendships that might function to help manage risk, even if people aren’t explicitly thinking about them in that way.
Thanks again for your great questions!