Who decides in the household when risk preferences conflict?

Abstract

Women’s low involvement in household decisions is an important cause of the persistence of gender inequality in developing countries, as it constrains women’s access to resources and opportunities. Despite its importance, little is known about the behavioral mechanisms behind women’s low involvement. Guided by a simple theoretical model, we hypothesize that women may refrain from participating in household decisions to avoid spousal conflict, the likelihood of which increases with spousal differences in risk preferences. Using survey data from both spouses of 675 couples in rural Tanzania, we find that spousal differences in risk preferences are associated with a lower likelihood that spouses make decisions jointly and a higher likelihood that decisions are made by the husband alone. These relations are stronger in couples where women are more conflict-averse.