The marginal utility of income transfers to the Third World

Bruce Russett

International Organization, 1978, vol. 32, issue 4, 913-928

Abstract: Three different methods are used to estimate the loss and gain in fulfillment of basic needs, for industrial and less developed countries, from possible global transfers of income. Focusing on prospective changes in life expectancy and infant mortality rates, the gain attributable to a given income increment for a person in a very poor country is on the order of seventy-five times greater than the loss to be expected for the average person residing in a rich country. Benefits to the poor are greater if income is distributed relatively equally within poor countries. Income transfers designed to meet basic needs would help to reduce birth rates in poor countries. The prospective gains in basic needs from the transfers are sufficiently large to exceed prospective losses from disruption of the global economy caused by the transfers. Fundamental questions of justice are thus raised.

Date: 1978
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