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Private Information in the Family

Author

Listed:
  • Bellue, Suzanne

    (CREST-IP Paris-ENSAE)

  • Doepke, Matthias

    (London School of Economics)

  • Tertilt, Michèle

    (University of Mannheim)

Abstract

Standard models of the family assume that spouses share information. In this paper, we challenge this assumption with theory and evidence. We field a new survey module in the Dutch LISS panel where spouses independently report their knowledge of each other's finances. Private information is pervasive: in 40 percent of couples, at least one partner lacks full knowledge of the other's income. We examine the implications of private information for intrahousehold risk sharing using a mechanism design approach. Our model predicts that a spouse's consumption share rises with their income share when information frictions are present but is independent of income under full information. Constrained-efficient allocations can be sustained without full revelation: each spouse chooses how much money to bring home, and hidden income is never revealed. Evidence from the LISS panel confirms the predictions: a positive relationship between income and consumption shares appears only among imperfectly informed couples. Controlling for limited commitment does not affect this result, suggesting that information asymmetries-rather than commitment frictions-drive departures from full insurance.

Suggested Citation

  • Bellue, Suzanne & Doepke, Matthias & Tertilt, Michèle, 2026. "Private Information in the Family," IZA Discussion Papers 18482, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18482
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    Keywords

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    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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