Is the Third Sector an Emerging Economic Institution? Social Preferences Versus Poverty Traps

Abstract

Relying on social preference theory and on poverty trap literature, this article suggests a richer and more nuanced role of the third sector as an institution complementary to the state and to the market in an economy’s development process. Social preferences are considered as the micro—fundaments of the third sector in that this promotes activities, laws, and organizational forms coherent with those preferences. The third sector contributes to overcoming poverty traps not only by spreading behavior based on altruism and solidarity but also by promoting investments in welfare services and human capital and by favoring the access of all the agents to the various markets.