Causes and Consequences of Hidden Income

Last registered on July 20, 2022

Pre-Trial

Trial Information

General Information

Title
Causes and Consequences of Hidden Income
RCT ID
AEARCTR-0009348
Initial registration date
May 09, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
May 09, 2022, 8:27 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
July 20, 2022, 10:23 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
Stanford University

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2022-05-10
End date
2022-07-01
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Why do couples hide income and what are the possible consequences? I hypothesize that couples hide income from each other because they have misaligned preferences, and an individual is more likely to hide from their spouse if they don’t have a say over how to allocate household resources. I recruit married couples from Kenya to a lab experiment, where they allocate lab endowment between a private pot and a household pot. I study how exogenously unobservable income affect individual’s choices to share income and to consume.

In addition, I measure spousal hidden income using a household survey. I ask each individual to report their own income, savings, transfers and expenditures, as well as their spouse's income, savings, transfers and expenditures. I hypothesize that individuals underestimate spouses income, and they may also underreport their own income when asked in front of spouse.
External Link(s)

Registration Citation

Citation
Zhang, Sally. 2022. "Causes and Consequences of Hidden Income." AEA RCT Registry. July 20. https://doi.org/10.1257/rct.9348
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
Experiment:
1. Observability of income: experimental income is observable to spouse or unobservable to spouse (within-subject)
2. Share of household pot: the individual receives 25%, 50% or 75% of the household pot, with the spouse receiving the rest (between-subject)

Survey design:
1. Self report vs. other report: each respondent is asked to report their own income/expenditures/savings/transfers and estimate those of spouse (within-subject)
2. Privacy of survey condition: interviewed privately or in front ot spouse (within-subject)
Intervention Start Date
2022-05-10
Intervention End Date
2022-07-01

Primary Outcomes

Primary Outcomes (end points)
Experiment: allocation to private pot, experimental earnings, consumption of in-lab gifts
Household survey: self-reported income, expenditures, savings and transfers; other-reported income, expenditures, savings and transfers
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The participant receives an endowment and decides to allocate their money between two pots. Contributions to the private pot will not be observed by the spouse. Contributions to the household pot will be multiplied by 2x and divided between the participant and their spouse. Contributions to the household pot will be revealed to both spouses. A participant that maximizes household income should allocate all experimental endowment to the household pot.

The participant is told that they will be able to purchase some vouchers in the lab. They can either purchase these goods with allocation from the private pot, in which case, their consumption will not be seen by the spouse. They can also purchase any of these goods together with their spouse after their investment proceeds from the household pot is distributed.

The game will be played for six rounds. One of the rounds for the participant and one of the rounds for each spouse will be randomly implemented.
1. Three rounds of fixed endowment (100 Ksh., 150 Ksh., 250 Ksh.): endowment is observable to spouse.
2. Two rounds of lottery endowment: spouse will know that participant drew from a lottery but not the realization. The lottery pays out 0 Ksh. with 10% probability, and 100 Ksh. / 150 Ksh. / 250 Ksh. each with 30% probability.
3. One round of choice: participant chooses between 150 Ksh. fixed endowment (observable to spouse), or lottery endowment (realization unobservable to spouse). The choice is unobservable to the spouse.

Participant couples will be cross randomized in division of the household pot. Husbands and wives will receive 25%/75%, 50%/50%, or 75%/25% respectively of the household pot.

To summarize, a participant who maximizes household income allocates all endowment to the household pot. There are three reasons why a participant may allocate endowment to the private pot: (1) control of resources, as the participant retains full control over resource in the private pot, (2) hiding income, as the resource in private pot is unobservable, and (3) hiding consumption, as the consumption choices from private pot is unobservable. I study whether participants allocate more to the private pot when income is unobservable. In addition, I study whether they choose different types of gifts when income is unobservable and whether they behave differently depending on the share of the household pot they will receive.

Using the household survey, I study whether couples have incomplete knowledge of spousal income, and whether misestimation of spousal income is due to hidden income. The couples will first be surveyed separately, where they are asked about their own income, expenditures, savings, transfers, as well as their knowledge of their spouse's income, expenditures, savings and transfers. At the end of the study, the couples will be asked a few questions together.
Experimental Design Details
Randomization Method
Randomization done in SurveyCTO
Randomization Unit
Couple level randomization for between-subject treatment
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
510
Sample size: planned number of observations
1020
Sample size (or number of clusters) by treatment arms
170 husbands get 75% of household pot, wives get 25% of household pot
170 wives get 75% of household pot, husbands get 25% of household pot
170 husbands get 50% of household pot, wives get 50% of household pot
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Maseno IRB
IRB Approval Date
2022-02-23
IRB Approval Number
01040/22
IRB Name
Stanford IRB
IRB Approval Date
2021-11-29
IRB Approval Number
55815

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials