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Limited insurance within the household: evidence from a field experiment in Kenya

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  • Robinson, Jonathan

Abstract

In many developing countries, unexpected income shocks are common, formal insurance is absent, and informal inter-household risk-sharing networks are unable to provide full insurance. An important question is therefore whether risk sharing within the household is effective. I conducted a field experiment in Western Kenya in which 142 married couples were followed for approximately 8 weeks. Every week, each individual had a 50% chance of receiving an income shock equivalent to a few days' income. Since these shocks are, by definition, small relative to lifetime income, they should not affect intra-household bargaining power and should only affect a Pareto efficient household through the pooled budget constraint. However, I find that men increase their private consumption when they receive the shock but not when their wives do, a rejection of efficiency. I present evidence that such behavior is not specific to the experiment - both husbands and wives spend more on themselves in weeks in which their labor income is higher. The results suggest that insurance is limited even within the households in this sample.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 32667.

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Date of creation: 10 May 2011
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Handle: RePEc:pra:mprapa:32667

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Keywords: risk sharing; intra-household; efficiency;

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Citations

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Cited by:
  1. Robinson, Jonathan & Yeh, Ethan, 2008. "Transactional Sex as a Response to Risk in Western Keny," MPRA Paper 7350, University Library of Munich, Germany.
  2. 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), School of Economics, University of East Anglia, Norwich, UK. 11-02, School of Economics, University of East Anglia, Norwich, UK..
  3. Bereket Kebede & Marcela Tarazona & Alistair Munro & Arjan Verschoor, 2011. "Intra-household efficiency; An experimental study from Ethiopia," CSAE Working Paper Series 2011-01, Centre for the Study of African Economies, University of Oxford.
  4. 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.
  5. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda," Working Papers, Economic Growth Center, Yale University 1027, Economic Growth Center, Yale University.
  6. 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.
  7. Esther Duflo, 2011. "Women’s Empowerment and Economic Development," NBER Working Papers 17702, National Bureau of Economic Research, Inc.
  8. Carlsson, Fredrik & Yang, Xiaojun, 2013. "Intertemporal Choice Shifts in Households: Do they occur and are they good?," Working Papers in Economics, University of Gothenburg, Department of Economics 569, University of Gothenburg, Department of Economics.
  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. 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.
  11. 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.
  12. 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.
  13. 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.

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