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

Jonathan Robinson

MPRA Paper from University Library of Munich, Germany

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.

JEL-codes: O12 (search for similar items in EconPapers)
Date: 2008-04-17
New Economics Papers: this item is included in nep-afr, nep-dev, nep-exp and nep-ias
References: Add references at CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Limited Insurance within the Household: Evidence from a Field Experiment in Kenya (2012)
Working Paper: Limited insurance within the household: evidence from a field experiment in Kenya (2011)
Working Paper: Limited Insurance Within the Household: Evidence from a Field Experiment in Kenya (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8314

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