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Limited Insurance Within the Household: Evidence from a Field Experiment in Kenya

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  • Robinson, Jonathan

Abstract

This paper presents results from a randomized …eld experiment to test for the impor- tance of limited commitment (due to incomplete contract enforceability) in explaining intra- household risk sharing arrangements in Kenya. The experiment followed 142 daily income earners and their spouses for 8 weeks. Every week, each individual had a 50% chance of receiving a 150 Kenyan shilling (US $2) income shock (equivalent to about 1.5 days’income for men and 1 week’s income for women). This paper has 2 main results. First, since the experimental payments are random, they allow for a direct test of allocative Pareto e¢ - ciency. I reject e¢ ciency, as male private goods expenditures are sensitive to the receipt of the payment. Second, the experiment varied the level of intra-household correlation in the experimental payments between couples. I …nd that women send bigger transfers to their husbands when shocks are independent or negatively correlated, a result consistent with the presence of limited commitment. I …nd no di¤erence in transfers for men, likely because the shocks were too small to cause the limited commitment constraint to bind for them.

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Paper provided by Department of Economics, UC Santa Cruz in its series Santa Cruz Department of Economics, Working Paper Series with number qt2px0t7pt.

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Date of creation: 17 Apr 2008
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Handle: RePEc:cdl:ucscec:qt2px0t7pt

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Keywords: limited commitment; contract enforceability; intrahousehold risk sharing;

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Cited by:
  1. Beblo, Miriam & Beninger, Denis & Cochard, Francois & Couprie, Helene & Hopfensitz, Astrid, 2013. "Equality-Efficiency Trade-off within French and German Couples - A Comparative Experimental Study," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79759, Verein für Socialpolitik / German Economic Association.
  2. Jonathan Robinson & Ethan Yeh, 2011. "Transactional Sex as a Response to Risk in Western Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 35-64, January.
  3. Esther Duflo, 2012. "Women Empowerment and Economic Development," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 1051-79, December.
  4. Kebede, Bereket & Tarazona, Marcela & Munro, Alistair & Verschoor, Arjan, 2013. "Intra-household efficiency: An experimental study from Ethiopia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Carlsson, Fredrik & Yang, Xiaojun, 2013. "Intertemporal Choice Shifts in Households: Do they occur and are they good?," Working Papers in Economics 569, University of Gothenburg, Department of Economics.
  6. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda," Working Papers 1027, Economic Growth Center, Yale University.
  7. Alistair Munro & Bereket Kebede & Marcela Tarazona-Gomez & Arjan Verschoor, . "Autonomy or efficiency: An experiment on household decisions in two regions of India," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 11-02, School of Economics, University of East Anglia, Norwich, UK..
  8. Miriam Beblo & Denis Beninger, 2012. "Do husbands and wives pool their incomes? Experimental evidence," Working Papers of BETA 2012-10, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  9. Hebous, Sarah & Klonner, Stefan, 2014. "Economic Distress and Farmer Suicides in India: An Econometric Investigation," Working Papers 0565, University of Heidelberg, Department of Economics.
  10. Utteeyo Dasgupta & Subha Mani, 2013. "Only Mine or All Ours: An Artefactual Field Experiment on Procedural Altruism," Fordham Economics Discussion Paper Series dp2013-01, Fordham University, Department of Economics.
  11. Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda-Working Paper 346," Working Papers 346, Center for Global Development.
  12. Thorsten Beck & Haki Pamuk & Burak R. Uras, 2014. "Entrepreneurial Saving Practices and Reinvestment: Theory and Evidence from Tanzanian MSEs," CSAE Working Paper Series 2014-15, Centre for the Study of African Economies, University of Oxford.
  13. Jakiela, Pamela & Ozier, Owen, 2012. "Does Africa need a rotten Kin Theorem ? experimental evidence from village economies," Policy Research Working Paper Series 6085, The World Bank.

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