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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 field experiment to test for the importance 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 efficiency. I reject efficiency, 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 find 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 find no difference 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 University Library of Munich, Germany in its series MPRA Paper with number 8314.

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Date of creation: 17 Apr 2008
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Handle: RePEc:pra:mprapa:8314

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Cited by:
  1. 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.
  2. Beblo, Miriam & Beninger, Denis & Cochard, François & Couprie, Hélène & Hopfensitz, Astrid, 2012. "Equality-Efficiency Trade-off within French and German Couples – A Comparative Experimental Study," TSE Working Papers 12-374, Toulouse School of Economics (TSE).
  3. Duflo, Esther, 2012. "Women's Empowerment and Economic Development," CEPR Discussion Papers 8734, C.E.P.R. Discussion Papers.
  4. 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.
  5. 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.
  6. 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.
  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. 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.
  9. 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.
  10. 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.
  11. 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.
  12. Hebous, Sarah & Klonner, Stefan, 2014. "Economic Distress and Farmer Suicides in India: An Econometric Investigation," Working Papers 0565, University of Heidelberg, Department of Economics.
  13. 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.

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