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Do husbands and wives pool their incomes? A couple experiment

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Abstract

We propose a simple and direct test of in-couple income pooling and provide a typology of couples that pool resources and those who do not. For this purpose, we performed a five-round experiment with 95 established real-life couples in Germany. In each round, the couples received the same total amount of money, but the relative allocation to the spouses differed and they had to agree on an irreversible private goods consumption pattern. We find that for the majority of the sample, the consumption choices depend on the spouses’ relative resources. While this suggests a rejection of income pooling at the mean, a substantial share of the couples do indeed pool their resources. Pooling behavior is more common among couples in which the spouses’ socioeconomic characteristics are more similar. In particular, traditional couples with distinct work division between the spouses are significantly less likely to pool their individual resources and treat any spouse’s income symmetrically. Conventional variables used to approximate income pooling are only loosely related to the behavior observed in our experiment.

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Notes

  1. Statement of the German Federal Constitutional Court to legitimate joint taxation of married couples in Germany.

  2. We will refer to all couple partners as spouses, regardless of their formal marital status.

  3. See the original slides in the “Appendix”.

  4. Although the reader might be tempted to associate certain stores with stereotypical gender prescriptions, it was not our intention to match cliché female or male preferences but to provide a portfolio of sufficiently distinct consumption goods bundles.

  5. Average preference deviations between partners correspond to about one banknote with respect to the electronics and the fashion-sports stores and slightly less for cosmetics on average. Across the rounds, the couples’ joint decisions are closest to the choice of the spouse who received more banknotes. Joint decisions remain on average closer to the female preferences for all rounds, however. For example, the couple choices correspond to the females’ for two-fifths (40 %) of the 79 couples when she receives all the money. In contrast, if the male receives all the money, only a quarter of the couples (25 %) make the same decisions as the male. More details on the individual vs. joint decision question are presented in a related paper that focuses on the bargaining power of the spouses (Beninger and Beblo 2016).

  6. The absolute maximum value is 3.2 when the couple makes completely different decisions in each round. That is, they spend all the banknotes on one good in the first round, on another good in the second round, etc. For example, the couple’s decision path for (fashion, cosmetics, electronics) is (4,0,0), (0,4,0), (0,0,4), (4,0,0), and (0,4,0) in rounds 1–5. As there are three goods but five rounds, the maximal value of 3.2 can be reached when applying Eq. (1). Under the further restriction that the couple’s decisions are combinations of the two individually preferred goods, we have: \(\hbox{max} ic_{n} = 2.4\).

  7. Though, preferences might still not be identical with respect to specific consumption goods offered in a given department store.

  8. As said, we observe this pattern for a non-negligible number of couples: 16. Among these 16 couples, 5 show marginally and unsystematically varying consumption patterns across rounds and 11 might be counted as pooling according to our definition, although we do not know anything about their behavior in situations where preferences do not match.

  9. This interpretation is supported by the positive correlation we observe among income, education, and the willingness to spend the personal payoff from the experiment on household purposes (or save the money in a common bank account). Indeed, in the questionnaire, 80 % of partners in richer households express a willingness to spend their payoff on common goods, whether female or male. Among the poorer couples, the share is only two-thirds..

  10. The identification procedure relies on restrictive assumptions summed up in the so-called ‘SR1’ hypothesis; i.e., the matrix of compensated price responses is the sum of a symmetric matrix and a matrix of, at most, rank 1 (see Βrowning and Chiappori 1998 for details). Note that we are unable to test the validity of the model as suggested by Βrowning and Chiappori (test of the ‘SR1’ hypothesis) since our prices are set to one and we have only three consumption goods. However, we can test the income-pooling assumption accordingly, based on our estimation results.

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Acknowledgments

Our experiment was conducted with financial support from the ANR-DFG project TIPI (French-German cooperation). The hospitality and academic support of the Universities of Cergy-Pontoise, Paris 1 (Panthéon-Sorbonne) and Strasbourg is gratefully acknowledged. We are thankful for comments and advice received from François Cochard, Hélène Couprie, Elisabeth Cudeville, Shoshana Grossbard, Astrid Hopfensitz, Oliver Kirchkamp, François Laisney, Paul Pézanis-Christou, Norma Schmitt, Jean-Christophe Vergnaud, several anonymous referees and seminar participants at the Universities of Paris 1, Hamburg, Jena, and York, as well as participants at VfS2014, SOLE 2015, and SABE 2015. We are indebted to Chris Jürschik, Nicola Schliephake, Mirjam Unger, and Sebastian Weindel for excellent research assistance. The usual disclaimer applies.

Author information

Authors and Affiliations

  1. Faculty of Business, Economics and Social Sciences, Universitaet Hamburg, Welckerstrasse 8, 20354, Hamburg, Germany

    Miriam Beblo & Denis Beninger

  2. Université de Strasbourg, Strasbourg, France

    Denis Beninger

Authors
  1. Miriam Beblo
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  2. Denis Beninger
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Corresponding author

Correspondence to Miriam Beblo.

Appendix: overview of the experimental design

Appendix: overview of the experimental design

1.1 Participants

See Table 6.

Table 6 Comparison of the experimental sample with population census data
Full size table

1.2 Structure of the experiment

Each experimental session was divided into four parts, as summarized in Table 7. For part I, the spouses were seated apart and asked to make individual decisions without communicating with each other or observing the choices of their partner or any other participant. Both spouses made independent decisions about money and time allocation between their partners and themselves, and made a consumption decision by choosing vouchers. They were also incentivized to reveal their individual wage rates in a second-price auction.

Table 7 Structure of the whole experimental session
Full size table

In part II, the spouses sat together and decided jointly on money allocation, time allocation, and voucher selection. Task 7, in conjunction with Task 3, was designed to create the direct income-pooling test that we focus on in this paper.

After the joint experimental part, we asked the couples to separate again, take their original seats, and fill in a questionnaire (part III). After completing the questionnaire, the participants received a note with their individual working time based on both their own responses and those of their partner on the respective task and round drawn from all labor tasks. In part IV of the experimental session, the participants had to stay in the room and perform office work for as many minutes as indicated on their notes. As soon as their labor time ended they were allowed to leave the room and collect their compensation. Accordingly, the end of the session was defined individually for each participant.

1.3 Instructions and screenshots from the experiment

1.3.1 Individual consumption choice task

Translation of the German instructions:

In this task you can decide on shopping options by choosing among vouchers for three different department stores. You will receive 200 Talers in 4 banknotes of 50 Talers each. You may cash these 4 banknotes in the department stores D, E and S. There is an envelope for each store. Please put your banknotes in the envelopes according to your consumption choices.

Please do not seal the envelopes!

Only one decision will be selected for your compensation. In case the woman’s decision is selected, you as a couple will be handed vouchers according to the woman’s consumption choices.

One example: If you wish to cash three notes at S, one at D and none at E, place three 50-Taler banknotes in the envelope for S, one note in the envelope for D and none in the envelope for E. In case this round is selected, as a couple you will receive three vouchers for S and one for D at the end of the study.

figure a

1.3.2 Joint consumption choice task

Translation of the German instructions:

In this task you will make your decisions together. Again, you can decide on shopping options by choosing among vouchers of three known department stores.

This task consists of five rounds. In each round you will receive 200 Talers in 4 banknotes of 50 Talers each. You may cash these 4 banknotes in the department stores D, E and S. There is an envelope for each store. Please put your banknotes in the envelopes according to your consumption choices.

Only one decision will be selected for your compensation. In case the first round of this task is selected, you as a couple will be handed vouchers according to your consumption choices in round 1.

One example: If you wish to cash three notes at S, one at D and none at E, place three 50-Taler banknotes in the envelope for S, one note in the envelope for D and none in the envelope for E. In case this round is selected, as a couple you will receive three vouchers for S and one for D at the end of the study.

figure b

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Beblo, M., Beninger, D. Do husbands and wives pool their incomes? A couple experiment. Rev Econ Household 15, 779–805 (2017). https://doi.org/10.1007/s11150-016-9342-0

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