Mine, your or ours? : the efficiency of household investment decisions : an experimental approach
Mani, Anandi (2007) Mine, your or ours? : the efficiency of household investment decisions : an experimental approach. Working Paper. Unpublished.
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The family is a universal and enduring institution that forms the basis of many economic decisions.
Is decision making within the family efficient? The empirical literature on this issue is inconclusive
to date, hence this paper uses a quasi-field experiment to examine this question. The experimental
analysis involved real-time observations of individual investment decisions made by three hundred
families in rural South India. Participants' control over family income was varied through how
they shared earnings from their investment decisions with their spouse, and also through the
form of payment. Information was varied through what spouses were told about participants'
investments options and actual choices, once the decisions were made. We found direct evidence
of inefficiency in investment decisions. Both for men and women, investment efficiency was very
sensitive to the control they wielded control over family income generated. However, the nature
of information their spouse received ex-post had little impact. Strikingly, even when there was
no tradeoff between maximizing household and private income, about a third of the men in the
sample undercut their own private income so as to narrow the income gap with their wives. In
all other decisions too, these men were less inclined to maximize household income, and so were
their wives. While women did care about control over family income, it was the absolute income,
rather than income relative to their husbands that seemed to matter. The findings suggest that
family decisions are a mixture of cooperation and conflict, with members willing to sacrifice some
efficiency for control and power.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Income, Family -- India, Decision making -- Investments|
|Official Date:||16 May 2007|
|Number of Pages:||38|
|Institution:||University of Warwick|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
Agarwal, B. (1994). A field of one’s own: gender and land rights in South Asia. Cambridge: Cambridge University Press.
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