Working Paper: CEPR ID: DP7574
Authors: Pierre Dubois; Ethan Ligon
Abstract: Using data on individual consumption from farm households in the Philippines, we construct a direct test of risk-sharing within the household. We contrast the efficient outcomes predicted by the unitary household model with the outcomes we might expect if food consumption delivers not only utils, but also nutrients affecting future productivity. The efficiency conditions which characterize the within-household allocation of food under the unitary model are violated, as consumption responds to earnings shocks. If productivity depends on nutrition, this explains some but not all of the response, as earnings "surprises" have some effect on the cost and composition of diet.
Keywords: nutrition; risk sharing; within household
JEL Codes: D12; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unexpected changes in individual earnings (J31) | household consumption allocations (D10) |
| productivity influenced by nutrition (J24) | consumption patterns change (D12) |
| productivity influenced by nutrition (J24) | efficiency conditions predicted by the unitary household model are violated (D10) |
| predictable increases in individual earnings (J31) | decrease in shares of food expenditures, calories, and protein (D12) |
| unexpected changes in individual earnings (J31) | rejection of the hypothesis of full risk-sharing within the household (D10) |
| efficiency conditions predicted by the unitary household model are violated (D10) | allocation of food expenditures, calories, and protein depends on individual earnings (D12) |
| allocation of food expenditures, calories, and protein depends on individual earnings (D12) | allocation is not Pareto optimal as per the unitary model (D61) |
| significant differences in elasticities of food expenditures between males and females (D12) | males bear a larger share of risk in the household (J12) |