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

Jonathan Robinson

Santa Cruz Department of Economics, Working Paper Series from Department of Economics, UC Santa Cruz

Abstract: This paper presents results from a randomized …eld experiment to test for the impor- tance 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 e¢ - ciency. I reject e¢ ciency, 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 …nd 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 …nd no di¤erence in transfers for men, likely because the shocks were too small to cause the limited commitment constraint to bind for them.

Keywords: limited commitment; contract enforceability; intrahousehold risk sharing (search for similar items in EconPapers)
Date: 2008-04-17
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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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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