IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/8314.html
   My bibliography  Save this paper

Limited Insurance Within the Household: Evidence from a Field Experiment in Kenya

Author

Listed:
  • 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.

Suggested Citation

  • Robinson, Jonathan, 2008. "Limited Insurance Within the Household: Evidence from a Field Experiment in Kenya," MPRA Paper 8314, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8314
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/8314/1/MPRA_paper_8314.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
    2. Stefan Dercon & Pramila Krishnan, 2000. "In Sickness and in Health: Risk Sharing within Households in Rural Ethiopia," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 688-727, August.
    3. Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2002. "Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 209-244.
    4. Nava Ashraf, 2009. "Spousal Control and Intra-household Decision Making: An Experimental Study in the Philippines," American Economic Review, American Economic Association, vol. 99(4), pages 1245-1277, September.
    5. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
    6. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-1046, October.
    7. Duncan Thomas, 1990. "Intra-Household Resource Allocation: An Inferential Approach," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 635-664.
    8. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-1096, December.
    9. repec:fth:oxesaf:94.17 is not listed on IDEAS
    10. Orazio Attanasio & Abigail Barr & Juan Camilo Cardenas & Garance Genicot & Costas Meghir, 2012. "Risk Pooling, Risk Preferences, and Social Networks," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 134-167, April.
    11. repec:adr:anecst:y:1993:i:29 is not listed on IDEAS
    12. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    13. François Bourguignon & Martin Browning & Pierre-André Chiappori & Valérie Lechene, 1993. "Intra Household Allocation of Consumption: A Model and some Evidence from French Data," Annals of Economics and Statistics, GENES, issue 29, pages 137-156.
    14. Ethan Ligon, 1998. "Risk Sharing and Information in Village Economies," Review of Economic Studies, Oxford University Press, vol. 65(4), pages 847-864.
    15. Christopher Udry, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 495-526.
    16. Dubois, Pierre & Ligon, Ethan, 2009. "Nutrition and Risk Sharing within the Household," TSE Working Papers 09-108, Toulouse School of Economics (TSE).
    17. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics of Roscas and Intrahousehold Resource Allocation," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 963-995.
    18. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Working Papers 94-6, University of Washington, Department of Economics.
    19. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    20. 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.
    21. Fafchamps, Marcel & Lund, Susan, 2003. "Risk-sharing networks in rural Philippines," Journal of Development Economics, Elsevier, vol. 71(2), pages 261-287, August.
    22. Ravallion, Martin & Dearden, Lorraine, 1988. "Social Security in a "Moral Economy": An Empirical Analysis for Java," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 36-44, February.
    23. Abigail Barr, 2003. "Risk pooling, commitment and information: An experimental test of two fundamental assumptions," Framed Field Experiments 00124, The Field Experiments Website.
    24. Vegard Iversen & Cecile Jackson & Bereket Kebede & Alistair Munro & Arjan Verschoor, 2006. "What's love got to do with it? An experimental test of household models in east uganda," Artefactual Field Experiments 00071, The Field Experiments Website.
    25. Dubois, Pierre & Ligon, Ethan A., 2011. "Incentives and nutrition for rotten kids: intrahousehold food allocation in the Philippines," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0c6758hs, Department of Agricultural & Resource Economics, UC Berkeley.
    26. Gustavo J. Bobonis, 2009. "Is the Allocation of Resources within the Household Efficient? New Evidence from a Randomized Experiment," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 453-503, June.
    27. Garance Genicot & Gary Charness, 2004. "An Experimental Test of Risk-Sharing Arrangements," 2004 Meeting Papers 807, Society for Economic Dynamics.
    28. François Bourguignon & Martin Browning & Pierre-André Chiappori, 2009. "Efficient Intra-Household Allocations and Distribution Factors: Implications and Identification," Review of Economic Studies, Oxford University Press, vol. 76(2), pages 503-528.
    29. Pedro Albarran & Orazio P. Attanasio, 2003. "Limited Commitment and Crowding out of Private Transfers: Evidence from a Randomised Experiment," Economic Journal, Royal Economic Society, vol. 113(486), pages 77-85, March.
    30. Shiv Saini & Maurizio Mazzocco, 2010. "Testing Efficient Risk Sharing with Heterogeneous Risk Preferences," 2010 Meeting Papers 237, Society for Economic Dynamics.
    31. Maurizio Mazzocco & Shiv Saini, 2012. "Testing Efficient Risk Sharing with Heterogeneous Risk Preferences," American Economic Review, American Economic Association, vol. 102(1), pages 428-468, February.
    32. John Hoddinott & Lawrence Haddad, 1994. "Does female income share influence household expenditures? Evidence from the Côte d'Ivoire," CSAE Working Paper Series 1994-17, Centre for the Study of African Economies, University of Oxford.
    33. Esther Duflo & Christopher Udry, 2003. "Intrahousehold Resource Allocation in Côte D'ivoire: Social Norms, Separate Accounts and Consumption Choices," Working Papers 857, Economic Growth Center, Yale University.
    34. Gary Charness & Garance Genicot, 2009. "Informal Risk Sharing in an Infinite-Horizon Experiment," Economic Journal, Royal Economic Society, vol. 119(537), pages 796-825, April.
    35. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    36. Akresh, Richard, 2005. "Understanding Pareto Inefficient Intrahousehold Allocations," IZA Discussion Papers 1858, Institute for the Study of Labor (IZA).
    37. Andrew D. Foster & Mark R. Rosenzweig, 2001. "Imperfect Commitment, Altruism, And The Family: Evidence From Transfer Behavior In Low-Income Rural Areas," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 389-407, August.
    38. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
    39. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 37-72, February.
    40. Shelly J. Lundberg & Robert A. Pollak & Terence J. Wales, 1997. "Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 463-480.
    41. Hoddinott, John & Haddad, Lawrence, 1995. "Does Female Income Share Influence Household Expenditures? Evidence from Cote d'Ivoire," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 77-96, February.
    42. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
    43. Iversen, Vegard & Jackson, Cecile & Kebede, Bereket & Munro, Alistair & Verschoor, Arjan, 2011. "Do Spouses Realise Cooperative Gains? Experimental Evidence from Rural Uganda," World Development, Elsevier, vol. 39(4), pages 569-578, April.
    44. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
    45. repec:cdl:agrebk:2221195 is not listed on IDEAS
    46. Doss, Cheryl R, 2001. "Is Risk Fully Pooled within the Household? Evidence from Ghana," Economic Development and Cultural Change, University of Chicago Press, vol. 50(1), pages 101-130, October.
    47. John Hoddinott and Lawrence Haddad, 1994. "Does female income share influence household expenditures? evidence from Côte d`Ivoire," Economics Series Working Papers WPS/1994-17, University of Oxford, Department of Economics.
    48. Goldstein, Marcus, 2004. "Intrahousehold efficiency and individual insurance in Ghana," LSE Research Online Documents on Economics 6644, London School of Economics and Political Science, LSE Library.
    49. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
    50. Arun G. Chandrasekhar & Cynthia Kinnan & Horacio Larreguy, 2014. "Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field," NBER Working Papers 20259, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:8314. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.