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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. Markus Jäntti & Ravi Kanbur & Jukka Pirttilä & Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2014. "Savings by and for the Poor: A Research Review and Agenda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 36-78, 03.
  2. Alistair Munro & Bereket Kebede & Marcela Tarazona-Gomez & Arjan Verschoor, 2011. "Autonomy or Efficiency. An experiment on household decisions in two regions of India," GRIPS Discussion Papers 10-33, National Graduate Institute for Policy Studies.
  3. Hélène Couprie & Miriam Beblo & Denis Beninger & François Cochard & Astrid Hopfensitz, 2012. "Equality-Efficiency Trade-off within French and German Couples – A Comparative Experimental Study," THEMA Working Papers 2012-44, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  4. Bereket Kebede, 2011. "Intra-household efficiency: An experimental study from Ethiopia," Economics Series Working Papers CSAE WPS/2011-01, University of Oxford, Department of Economics.
  5. Robinson, Jonathan & Yeh, Ethan, 2009. "Transactional sex as a response to risk in western Kenya," Policy Research Working Paper Series 4857, The World Bank.
  6. Hebous, Sarah & Klonner, Stefan, 2014. "Economic Distress and Farmer Suicides in India: An Econometric Investigation," Working Papers 0565, University of Heidelberg, Department of Economics.
  7. 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.
  8. 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.
  9. 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.
  10. Esther Duflo, 2012. "Women Empowerment and Economic Development," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 1051-79, December.
  11. 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.
  12. Utteeyo Dasgupta & Subha Mani, 2013. "Only Mine or All Ours: An Artefactual Field Experiment on Procedural Altruism," Fordham Economics Discussion Paper Series, Fordham University, Department of Economics dp2013-01, Fordham University, Department of Economics.
  13. Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda-Working Paper 346," Working Papers, Center for Global Development 346, Center for Global Development.

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