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Do Financial Incentives Aimed at Decreasing Interhousehold Inequality Increase Intrahousehold Inequality?
Amanda Chuan1, John List2, Anya Samek3
1Michigan State University School of Human Resources & Labor Relations, 368 Farm Lane, East Lansing, MI 48842.
Journal of Public Economics
|September 23, 2021
Summary
Financial incentives for disadvantaged families boost investment in one child but reduce time spent with siblings. This increases intra-household inequality, potentially overstating program benefits.
Area of Science:
- Behavioral Economics
- Developmental Economics
- Sociology
Background:
- Financial incentives can reduce socioeconomic inequality by promoting human capital development in children.
- Understanding intra-household resource allocation is crucial for evaluating such interventions.
Purpose of the Study:
- To investigate how parents allocate their time when receiving financial incentives.
- To examine the impact of financial incentives on parental investment in children and siblings.
Main Methods:
- A field experiment was conducted to observe parental time allocation.
- The study focused on disadvantaged families receiving financial incentives.
Main Results:
- Financial incentives led to increased investment in the target child.
- Parents substituted time from siblings to the target child, increasing intra-household inequality.
- Aggregate program gains were overestimated when only considering the target child.
Conclusions:
- While financial incentives can enhance human capital, they may inadvertently increase intra-household inequality.
- Policy evaluations should consider intra-household dynamics and sibling effects for a comprehensive understanding of program impact.
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