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Hide and Seek: A Theory of Efficient Income Hiding within the Household

Listed author(s):
  • Alistair Munro

    (National Graduate Institute for Policy Studies)

In many countries, spouses routinely hide income, consumption and assets from one another. In this paper, I provide a theoretical model in which hiding is costly and only some expenditure can be hidden. I characterise the set of ex ante Pareto efficient allocations and show by means of extended examples that in some cases it can be efficient for one or both partners to lie about their income. Examples also show that efficient hiding may not be a marker of power or weakness in the household decision-making process. As such, it may not be possible to make meaningful inference about the nature of the household simply by observing whether assets or income are hidden.

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File URL: https://grips.repo.nii.ac.jp/?action=repository_action_common_download&item_id=1153&item_no=1&attribute_id=20&file_no=1
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Paper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 14-17.

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Length: 39 pages
Date of creation: Oct 2014
Handle: RePEc:ngi:dpaper:14-17
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  2. Lacker, Jeffrey M & Weinberg, John A, 1989. "Optimal Contracts under Costly State Falsification," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1345-1363, December.
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  6. Saku Aura, 2002. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," Working Papers 0217, Department of Economics, University of Missouri.
  7. Olivier Dagnelie & Philippe Lemay‐Boucher, 2012. "Rosca Participation in Benin: A Commitment Issue," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(2), pages 235-252, 04.
  8. Navin Kartik, 2009. "Strategic Communication with Lying Costs," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1359-1395.
  9. Bereket Kebede & Marcela Tarazona & Alistair Munro & Arjan Verschoor, 2014. "Intra-household Efficiency: An Experimental Study from Ethiopia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 23(1), pages 105-150.
  10. Joyce J. Chen, 2006. "Migration and Imperfect Monitoring: Implications for Intra-Household Allocation," American Economic Review, American Economic Association, vol. 96(2), pages 227-231, May.
  11. Pamela Jakiela & Owen Ozier, 2016. "Does Africa Need a Rotten Kin Theorem? Experimental Evidence from Village Economies," Review of Economic Studies, Oxford University Press, vol. 83(1), pages 231-268.
  12. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
  13. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
  14. Alistair Munro & Bereket Kebede & Marcela Tarazona-Gomez & Arjan Verschoor, 2010. "The lion’s share. An experimental analysis of polygamy in Northern Nigeria," GRIPS Discussion Papers 10-27, National Graduate Institute for Policy Studies.
  15. Joost de Laat, 2008. "Household Allocations and Endogenous Information," Cahiers de recherche 0827, CIRPEE.
  16. Carolina Castilla & Thomas Walker, 2013. "Is Ignorance Bliss? The Effect of Asymmetric Information between Spouses on Intra-household Allocations," American Economic Review, American Economic Association, vol. 103(3), pages 263-268, May.
  17. Farmer, Amy & Tiefenthaler, Jill, 1995. "Fairness concepts and the intrahousehold allocation of resources," Journal of Development Economics, Elsevier, vol. 47(2), pages 179-189, August.
  18. 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.
  19. Thomas, Duncan & Contreras, Dante & Frankerberg, Elizabeth, 2002. "Distribution of power within the household and child health," MPRA Paper 80075, University Library of Munich, Germany, revised Mar 2002.
  20. Jungmin Lee & Mark L. Pocock, 2007. "Intrahousehold allocation of financial resources: evidence from South Korean individual bank accounts," Review of Economics of the Household, Springer, vol. 5(1), pages 41-58, March.
  21. Shelly Lundberg & Robert A. Pollak, 1996. "Bargaining and Distribution in Marriage," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 139-158, Fall.
  22. Frances Woolley, 2000. "Control over Money in Marriage," Carleton Economic Papers 00-07, Carleton University, Department of Economics, revised 2003.
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