Can Pressure to Share Reduce Income? Experimental Evidence from Village Economies

Featuring
Pamela Jakiela
Assistant Professor of Agricultural & Resource Economics
University of Maryland

With Discussant
Marco Castillo
Associate Professor of Economics
George Mason University

At the first MADS of the 2012-2013 academic year, Pamela Jakiela will present a new paper that measures the economic impacts of social pressures to share income with kin and neighbors in rural Kenyan villages. She will share the results of a lab experiment in which the observability of investment returns is randomly varied to test whether subjects reduce their income in order to keep it hidden. Jakiela and her co-author find that women adopt an investment strategy that conceals the size of their initial endowment in the experiment, though that strategy reduces their expected earnings. This effect is largest among women with relatives attending the experiment. Though this paper provides experimental evidence from a single African country--Kenya--observational studies suggest that similar kin pressures may be prevalent in many rural areas throughout Sub-Saharan Africa.

*The Massachusetts Ave. Development Seminar (MADS) is a ten year-old research seminar series that brings some of the worlds leading development scholars to discuss their new research and ideas. The presentations meet an academic standard of quality and are at times technical, but retain a focus on a mixed audience of researchers and policymakers.