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Does Africa need a rotten Kin Theorem ? experimental evidence from village economies

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  • Jakiela, Pamela
  • Ozier, Owen

Abstract

This paper measures the economic impact of social pressure to share income with kin and neighbors in rural Kenyan villages. The authors conduct a lab experiment in which they randomly vary the observability of investment returns. The goal is to test whether subjects reduce their income in order to keep it hidden. The analysis finds that women adopt an investment strategy that conceals the size of their initial endowment in the experiment, although that strategy reduces their expected earnings. This effect is largest among women with relatives attending the experiment. Parameter estimates suggest that women behave as though they expect to be pressured to share four percent of their observable income with others, and substantially more when close kin can observe income directly. Although this paper provides experimental evidence from a single African country, observational studies suggest that similar pressure from kin may be prevalent in many rural areas throughout Sub-Saharan Africa.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6085.

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Date of creation: 01 Jun 2012
Date of revision:
Handle: RePEc:wbk:wbrwps:6085

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Keywords: Economic Theory&Research; Investment and Investment Climate; Emerging Markets; Labor Policies; Debt Markets;

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References

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  1. Ingela Alger & J�rgen W. Weibull, 2010. "Kinship, Incentives, and Evolution," American Economic Review, American Economic Association, vol. 100(4), pages 1725-58, September.
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  4. Marcel Fafchamps & David McKenzie & Simon R. Quinn & Christopher Woodruff, 2011. "When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana," NBER Working Papers 17207, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. repec:cge:warwcg:49 is not listed on IDEAS
  2. repec:hal:wpaper:halshs-00948098 is not listed on IDEAS
  3. Matthew Collin, 2013. "Tribe or title? Ethnic enclaves and the demand for formal land tenure in a Tanzanian slum," CSAE Working Paper Series 2013-12, Centre for the Study of African Economies, University of Oxford.
  4. Pascaline Dupas & Jonathan Robinson, 2011. "Why Don't the Poor Save More? Evidence from Health Savings Experiments," NBER Working Papers 17255, National Bureau of Economic Research, Inc.
  5. Sylvie Lambert & Pauline Rossi, 2014. "Sons as Widowhood Insurance: Evidence from Senegal," PSE Working Papers halshs-00948098, HAL.
  6. 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.
  7. De Weerdt, Joachim & Hirvonen, Kalle, 2013. "Risk sharing and internal migration," Policy Research Working Paper Series 6429, The World Bank.
  8. Marcel Fafchamps & David McKenzie & Simon Quinn & Christopher Woodruff, 2011. "When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana," CSAE Working Paper Series 2011-11, Centre for the Study of African Economies, University of Oxford.
  9. Jeffrey Flory, 2011. "Micro-Savings and Informal Insurance in Villages: How Financial Deepening Affects Safety Nets of the Poor, A Natural Field Experiment," Working Papers 2011-008, Becker Friedman Institute for Research In Economics.
  10. Fafchamps, Marcel & McKenzie, David & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2011. "When is capital enough to get female enterprises growing ? evidence from a randomized experiment in Ghana," Policy Research Working Paper Series 5706, The World Bank.
  11. Raymond P. Guiteras & B. Kelsey Jack, 2014. "Incentives, Selection and Productivity in Labor Markets: Evidence from Rural Malawi," NBER Working Papers 19825, National Bureau of Economic Research, Inc.
  12. 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.
  13. Ubfal, Diego, 2012. "How General Are Time Preferences? Eliciting Good-Specific Discount Rates," IZA Discussion Papers 6774, Institute for the Study of Labor (IZA).
  14. Brune, Lasse & Gine, Xavier & Goldberg, Jessica & Yang, Dean, 2011. "Commitments to save : a field experiment in rural Malawi," Policy Research Working Paper Series 5748, The World Bank.
  15. Aggarwal, Shilpa & Klapper, Leora & Singer, Dorothe, 2012. "Financing businesses in Africa : the role of microfinance," Policy Research Working Paper Series 5975, The World Bank.
  16. Daniel M. Hungerman, 2014. "Public Goods, Hidden Income, and Tax Evasion: Some Nonstandard Results from the Warm-Glow Model," NBER Working Papers 19804, National Bureau of Economic Research, Inc.
  17. Fafchamps, Marcel & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2014. "Microenterprise growth and the flypaper effect: Evidence from a randomized experiment in Ghana," Journal of Development Economics, Elsevier, vol. 106(C), pages 211-226.
  18. Ambler, Kate, 2013. "Don’t tell on me: Experimental evidence of asymmetric information in transnational households:," IFPRI discussion papers 1312, International Food Policy Research Institute (IFPRI).
  19. Grimm, Michael & Hartwig, Renate & Lay, Jann, 2013. "Does Forced Solidarity Hamper Investment in Small and Micro Enterprises?," IZA Discussion Papers 7229, Institute for the Study of Labor (IZA).

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