Abstract
Two games from experimental economics are paired to test household models. These experimental techniques can be helpful for informing policy that assigns welfare transfers, especially in the context of endogenous relationships or when impoverished families are omitted from income separability tests due to a lack of non-labor income, which is required for demand analysis of intrahousehold models. A trust game tests for Pareto efficiency, and a newly developed game tests for bargaining by determining if willingness-to-pay for a product changes based on endowment ownership. These games are applied in Salvador, Brazil, to a population not yet studied in the economic intrahousehold literature: adolescent mothers who live with their mothers. Their relationship is key for the welfare of adolescents’ children. The game outcomes reject Pareto efficiency but little evidence of bargaining is found. Qualitative survey questions confirm a cooperative relationship.
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Notes
Bergstrom (1989) finds a class of utility functions for which this does not hold and the child would not maximize income. Without transferable utility, a child can manipulate the utility possibilities frontier in his favor. However, I do not include these with my definition of the unitary model, as the result falls well outside of the spirit of being “unitary.”
Game instructions available in Electronic supplementary material.
R$1 ≈ US$0.50.
Only 2 of the 58 teens not enrolled in school did not wish to return, so a comparable statistic for teens contains little information. A correlation (0.1528, p value 0.0637) is also found between grandmother’s valuation and the number of baby books owned, though this disappears when owning baby books considered as a dummy variable. Education level is not correlated with the valuations elicited during the game for either teen or grandmother.
In addition to varying the owner of the endowment, I also vary the order in which the valuations are reported. No significant impact is found from this source of variation. Especially considering that there is no policy recommendation that results from a finding based on eliciting a joint valuation first, I do not include these results; I pool the treatments and only consider the variation in endowment ownership.
Other options besides doubling could be used: any term >1 would has a Pareto efficient strategy of placing all money into the hat.
Yet if the sharing rule is determined by ex-post income distribution there is a possibility that the result is not Pareto Optimal. If, say, the sharing rule is based entirely on the fraction of income after the game is played, then if person one contributes all to person two, person one is left with no bargaining power at all. If person two does not sufficiently care about person one, person one may prefer to keep the money for herself. Even though this model is technically collective, the non-Pareto optimal outcome and the perceived unfairness of this sharing rule allow us to consider it to be an uncooperative model; certainly the spirit of cooperation does not hold.
This figure is 2.5 % points higher (though not significantly different) when the question who has the most authority in the household is asked. However, the “family head” question is more formal and likely to reflect an official stance to outsiders, whereas household authority may have to do more with internal politics.
Participants were paid in vouchers for a neighborhood convenience store or grocery. Money was originally proposed for remuneration but the leaders in the Pastoral were concerned about spending on drugs and the enumerators were concerned for their safety. Vouchers resolved these concerns but still allowed the participants a wide span of purchasing choices.
These statistics are aggregated from leaders’ records taken from the visits with mothers noted in the leader’s chart of indicators for each child. While in any month some small number of visits may not have been completed, the quality of the data reported is high as the leaders are well trained. To become a leader, one must undergo multi-day training, studying a 250-page handbook on pregnancy, child development, and interaction with families.
The age of the baby is positively correlated with diarrhea reporting (0.24); thus these numbers are probably not skewed by new mothers incorrectly identifying infant feces as diarrhea.
All statistics in this paragraph from my data are significantly different from the comparison reference with 99 % confidence.
In the Pastoral 62.2 % (region two) and 53.4 % (region three) of 6-month-olds are exclusively breast fed and 59.3 % (region two) and 87.5 % (region three) of 4-month-olds are exclusively breast fed (Pastoral da Criança Internacional 2009).
I adjusted the wages up R$50 of 10 formal sector salaried workers interviewed before February 1st, 2009, to correspond to the minimum wage change on that date.
If one person said they were shared, even if the other did not, I counted them as shared.
Placing <$2.50 could be rational if the owner of the hat knew that the other would appropriate all gains after the game was over. Then out of maliciousness, not irrationality, might money be withheld from the hat. Unlikely this is the case here, since I found no significant difference in rational players and “irrational” players responses to a question on how strongly would they prefer to live with the other.
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Acknowledgments
Generous funding was provided by the Social Science Research Council and Cornell University’s Einaudi and Latin American Studies Centers. I am indebted to Dr. José Guilherme Lara Resende of the Universidade de Brasilia for academic sponsorship within Brazil. I thank Elisalda de Lima Costa and Diego Corrêa for research assistance. Dan Benjamin, Kaushik Basu, Lourdes Beneria, David Sahn, Gina Reynolds, Evan Variano and participants in the UC Berkeley development and demography lunches provided helpful comments, as did two anonymous reviewers. Many thanks to my gracious hosts Associação Criança e Familia and the leaders of the Pastoral da Criança for their generosity and wisdom.
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Reynolds, S.A. Behavioral games and intrahousehold allocation: teenage mothers and their mothers in Brazil. Rev Econ Household 13, 901–927 (2015). https://doi.org/10.1007/s11150-013-9213-x
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DOI: https://doi.org/10.1007/s11150-013-9213-x