Editing Transfer payment (section)

{{Short description|Governmental wealth redistribution}}
[[File:Transfer payments as a percent of federal revenue.webp|thumb|325px|Transfer payments to (persons) as a percent of federal revenue in the [[United States]]]]
[[File:Transfer payments to persons + business.webp|thumb|325px|Transfer payments to (persons + business) in the United States]]

In [[macroeconomics]] and [[finance]], a '''transfer payment''' (also called a '''government transfer''' or simply '''fiscal transfer''') is a [[redistribution of income and wealth]] by means of the [[government]] making a payment, without [[Goods and services|goods or services]] being received in return (in contrast to [[financial transaction]]). These kind of payments are one-sided in nature, i.e. one party enjoys economic benefits from the other party. These payments are considered to be non-exhaustive because they do not directly absorb [[Factors of production|resources]] or create [[Output (economics)|output]].<ref>{{cite web |url= http://www.economist.com/economics-a-to-z/t#node-21529382 |title=Economics A–Z terms beginning with T –transfer  |first= Matthew |last=Bishop |work=The Economist |year=2012 |quote=Payments that are made without any good or service being received in return. Much Public Spending goes on transfers, such as pensions and WELFARE benefits. Private-sector transfers include charitable donations and prizes to lottery winners. |access-date=11 July 2012}}</ref> Examples of transfer payments include [[welfare (financial aid)|welfare, financial aid]], [[social security]], and government [[Subsidy|subsidies]] for certain [[business]]es.

Unlike the [[Trade|exchange]] transaction which mutually benefits all the parties involved in it, the transfer payment consists of a donor and a recipient, with the donor giving up something of value without receiving anything in return. Transfers can be made both between individuals and entities, such as private [[Company|companies]] or [[Government agency|governmental bodies]]. These transactions can be both voluntary or involuntary and are generally motivated either by the [[altruism]] of the donor or the malevolence of the recipient.<ref>{{Citation|last=Lampman|first=Robert J.|chapter=Transfer Payments|date=2016|pages=1–3|publisher=Palgrave Macmillan UK|language=en|doi=10.1057/978-1-349-95121-5_1755-1|isbn=9781349951215|title=The New Palgrave Dictionary of Economics}}</ref>

For the purpose of calculating [[gross domestic product]] (GDP) by expenditure method, [[government spending]] does not include transfer payments, which are the reallocation of money from one party to another rather than expenditure on newly produced goods and services.<ref name="HallLieberman2012">{{cite book |last1=Hall |first1=Robert E. |last2=Lieberman |first2=Marc |title=Macroeconomics: Principles and Applications |chapter-url=https://books.google.com/books?id=GsH6CAAAQBAJ&pg=PA145 |date=2012 |publisher=Cengage Learning |isbn=978-1-111-82235-4 |pages=145 |chapter=Chapter 6: Production, Income, and Employment}}</ref>