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Gender, Intra-Household Allocations, and Financial Decision-Making

Paper Session

Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)

Hosted By: American Economic Association
  • Chair: Taha Choukhmane, Massachusetts Institute of Technology

Efficiency in Household Decision Making: Evidence from the Retirement Savings of U.S. Couples

Taha Choukhmane
Massachusetts Institute of Technology
Lucas Goodman
U.S. Treasury Department
Cormac O'Dea
Yale University


We study how married couples allocate their retirement saving contributions across each spouse’s retirement account using a new employer-employee linked dataset covering more than 1.3 million U.S. couples. Exploiting differences in matching incentives across employers, we find that 25% of couples could increase their total retirement saving, by an average of $749 a year, simply by reallocating some of their existing contributions to the account of the spouse with a higher marginal employer match rate. As a benchmark, we estimate that in the absence of any cooperation, around 40% of couples would make similarly inefficient allocations. This suggests that a substantial fraction of married couples make their retirement contributions in a way that is inconsistent with Pareto-Efficiency, the core assumption underlying collective models of household decision-making. Our results are not driven by inertia, but we find that coordination between spouses improves with indicators of greater marital commitment such as the length of the marriage.

The Gender Gap in Household Bargaining Power: A Portfolio-Choice Approach

Ran Gu
University of Essex
Cameron Peng
London School of Economics
Weilong Zhang
Cambridge University


We quantify how bargaining power is distributed when spouses make financial decisions together. We build a model in which each spouse has a risk preference and must bargain with each other to make asset decisions for the household. By structurally estimating the model with longitudinal data from Australian households, we show that the average household’s asset allocation reflects the husband’s risk preference 44% more than the wife’s. This gap in bargaining power is partially explained by gender differences in income and employment status, but is also due to gender effects. We provide further evidence that links the distribution of bargaining power to views on gender norms in the cross-section.

Gender Roles in the Allocation of Spending Rights within the Household: Evidence from Additional Credit Cards.

Paolina Medina
Texas A&M University


We study the role of gender on the allocation of spending rights within a household. We do so by exploiting one unique feature of additional credit cards in Mexico: although credit lines are assigned at the account level based on the creditworthiness of the primary cardholder, primary card holders are required to explicitly allocate a specific fraction of their credit line to each additional credit card they sponsor. We document that, compared to men, when woman are primary cardholders they assign 25% more of their credit line to additional cardholders of the opposite sex. However, spending with these additional cards is 47% lower than when the primary cardholder is a man. We complement the analysis by looking at consumers' choice of payment method between additional credit card or primary credit card, for those who have access to both. When women have access to both a primary and an additional credit card, they distribute their spending on all categories across both plastics in a fairly uniform way. In contrast when men have access to both primary and additional cards, they pay predominantly with the primary or additional card depending on the spending category: entertainment, travel and leisure are paid for with their primary credit cards, whereas health and education expenses are more likely to be paid with the additional credit card. When jointly considered, these facts reject the predictions of unitary household models, and suggest that traditional gender roles influence the management of family finances.

Intra-household Frictions, Anchoring, and the Credit Card Debt Puzzle

Erkki Vihriälä
Aalto University


I explain the credit card debt puzzle – the co-holding of high-cost debt and low-yield liquid assets – with a household and individual determinant that lower debt repayments. At the household level, co-holding is consistent with intra-household frictions. Couples co-hold 40 percent more than individuals relative to income, and couples do not cooperate when given an option to reduce high-cost debt. At the individual level, anchoring contributes to co-holding, because credit card debt payments are often equal to or near the minimum despite high liquidity. Individuals with low regular payments account for over half of total individual co-holding.
Alessandra Voena
Stanford University
Jawad Addoum
Cornell University
Da Ke
University of South Carolina
Corina Mommaerts
University of Wisconsin-Madison
JEL Classifications
  • G5 - Household Finance
  • D1 - Household Behavior and Family Economics