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American Economic Journal: Applied Economics: Vol. 4 No. 4 (October 2012)

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

Article Citation

Robinson, Jonathan. 2012. "Limited Insurance within the Household: Evidence from a Field Experiment in Kenya." American Economic Journal: Applied Economics, 4(4): 140-64.

DOI: 10.1257/app.4.4.140

Abstract

In developing countries, unexpected income shocks are common but informal insurance is typically incomplete. An important question is therefore whether risk-sharing within the household is effective. This paper presents results from a field experiment with 142 married couples in Kenya in which individuals were given random income shocks. Even though the shocks were small relative to lifetime income, men increase private consumption when they receive the shock but not when their wives do, a rejection of efficiency. Such behavior is not specific to the experiment—both spouses spend more on themselves when their labor income is higher. (JEL D14, D81, G22, O12, O16)

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Authors

Robinson, Jonathan (U CA, Santa Cruz)

JEL Classifications

D14: Personal Finance
D81: Criteria for Decision-Making under Risk and Uncertainty
G22: Insurance; Insurance Companies
O12: Microeconomic Analyses of Economic Development
O16: Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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