Decision-Making in Complex Households

Marcos Rangel and Duncan Thomas

No 2019-070, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: Extremely rich data on farm households in Burkina Faso are used to test whether resource are allocated Pareto efficiently. The complexity of household structures, including multi-generation and polygynous households, is taken into account to developing tests from theoretical models of behavior. Credible measures of bargaining power are constructed exploiting the fact that individuals within a household have well-defined property rights over the plots they own. Using data on consumption choices, we establish that in farm households headed by a monogamous couple (with no co-resident adult sons), resource allocations are consistent with efficiency. In more complex household structures, including polygynous households, efficiency in allocations is not rejected in models that allow more than two household members to have agency in decision-making. In contrast, tests for efficiency based on whether the same farm households maximize profits by equating marginal products across plots are rejected for all household types. Further, these same tests indicate individuals do not equate marginal products across their own plots. We conclude, therefore, that tests of models of resource allocation based on production-side decisions are likely to be misleading. In contrast, the consumption-side tests provide novel insights into the nature of decision-making within complex households.

Keywords: Burkina Faso; polygyny; monogamy; efficiency of allocations (search for similar items in EconPapers)
JEL-codes: D13 D70 J12 (search for similar items in EconPapers)
Date: 2019-12
Note: FI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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