Families, Farms and Financial Frictions in Mali

About this event

We cannot reject the (static) efficiency of the allocation of consumption within households. In contrast, we show that production choices on farms cultivated by different members of the same household do not satisfy the restrictions required by within-household cost minimization. Most models of intra-household allocation are therefore rejected. The patterns of investment and expenditures can be explained by the incentives created by the family structures in which households are embedded. This highlights the importance of how culture creates the incentives which affect how investments are made.