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

47 Pages Posted: 13 Oct 2008

See all articles by Jonathan Robinson

Jonathan Robinson

University of California, Santa Cruz

Date Written: April 17, 2008

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.

Keywords: Kenya, Daily Income, Experiment, Week's income, Women's Income, Men's income

JEL Classification: C93, D13, D62, O12

Suggested Citation

Robinson, Jonathan, Limited Insurance within the Household: Evidence from a Field Experiment in Kenya (April 17, 2008). Available at SSRN: https://ssrn.com/abstract=1282231 or http://dx.doi.org/10.2139/ssrn.1282231

Jonathan Robinson (Contact Author)

University of California, Santa Cruz ( email )

1156 High St
Santa Cruz, CA 95064
United States

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