Household bargaining and spending on children

17 October 2017 11:18

Household bargaining and spending on children

PhD students Charlotte Ringdal and Ingrid Hoem Sjursen have a working paper on "Household bargaining and spending on children: Experimental evidence from Tanzania."

Household bargaining
Household bargaining

Ringdal and Sjursen have investigated whether increasing the wife’s bargaining power causes a couple to allocate more resources to their child, and, if so, what the underlying mechanisms for this might be. 

The experiment was conducted with married couples in Dar es Salaam, Tanzania. The main outcome of interest is how the couples distribute a fixed endowment between the wife, the husband, and one of their children.

Female empowerment is undoubtedly a goal of great intrinsic importance, but the policy debate has also focused on other reasons for empowering women. In particular, it has been argued that increasing women’s intra-household bargaining power increases spending on goods and services that benefit children.

More gender equality

Ringdal and Hoem Sjursen observe a significant reduction in the allocation to the child in the bargaining treatment where the wife has the first-mover advantage compared to the reverse. This result challenges the common assumption that targeting the wife is beneficial to children. On the other hand, increasing the wife’s bargaining power benefits gender equality among children; girls receive as much as boys when the wife has some bargaining power. This finding suggests that increasing the wife’s bargaining power may lead to a more gender-equal society over time.

Patient parents are better for children

Ringdal and Hoem Sjursen also find that the effect of an increase in bargaining power depends on the difference in time preferences between spouses. When the wife is less patient than the husband, giving her full bargaining power decreases the allocation to the child by 13.7 percentage points (from 38% when the husband is the dictator to 24.3% when the wife is the dictator). This result illustrates the importance of time preferences in the decision-making process in the household.

In conclusion increasing the wife’s bargaining power does not increase the share allocated to the child, but leads to more gender-equal allocations to children. Second, it is better for the child that the most patient spouse has more relative bargaining power.

Read the working paper

More working papers from FAIR-The Choice Lab