Altruism and Trust: Can They Predict Remittances?

Remittances are significant as a large component of a region's foreign exchange and gross domestic product, especially in Africa, Latin America, and the Caribbean. Inoue (2018) found that remittances lower the level of poverty in receiving countries. The increase in remittances to developing countries (Mondal & Khanam 2018) necessitates investigation of motivations for flow of remittances. This research examines the relationship between altruism and remittance outflow as well as trust and remittances. This study used a quantitative cross-sectional research design with 214 countries representing Europe and Central Asia, Latin America and the Caribbean, East Asia and the Pacific, North America, the Middle East and North Africa, South Asia, and Sub-Saharan Africa. The data for remittance outflow was obtained from the World Bank's 2013 and 2014 data archives, altruism data from the World Giving Index, total population from the World Bank 2014 archives, and data for trust from the Interpersonal Trust Index. The results showed that Sao Tome and Principe sent the least in remittances during the years 2013 and 2014, while migrants in the U.S. sent the most in remittances. Norway had the highest trust score, while New Zealand and Australia had the highest score for altruism. There was a moderate, positive linear relationship between trust and remittance outflow, and between altruism and remittance outflow. Two models were developed for this study. Model 1 consisted of 63 countries while Model 2 had 61 countries. Linear regressions were utilized to analyze the research models and test the study's hypotheses. The findings in Model 1 showed that altruism and trust explained motivations for remittance, while Model 2 showed that trust was the main motive. Altruism and trust are significant predictors for remittances. Between the two predictors, trust is most important to migrants. Policy implications of the study include focusing on formal channels of remitting such as banks and other official businesses that can transfer money. Furthermore, governments should concentrate on building trust in people by getting more citizens involved in policymaking whether they are local or live abroad. These efforts can significantly increase remittances, which in turn can improve a country's economy.