Inefficient Decision Making and Female Bargaining Power

Dominant economic models of household decision-making assume a utopian scenario characterised by cooperation, commitment, and efficiency.

While elegant and tractable, a range of common family behaviours fall outside the scope of these frameworks limiting our understanding of households as economic units and their role in helping individuals insure against shocks.

Furthermore, the policy prescriptions implied by the standard models can result in harmful unintended consequences if implemented in contexts where non-cooperative decision-making prevails (Erten and Keskin, 2018; Bobonis et al, 2013).FEMPOWER will make both methodological and substantive contributions to the economic literature on female bargaining power by harnessing novel sources of administrative and survey data and by building on my expertise in developing innovative ways of modelling family decision making.

FEMPOWER will develop frameworks for estimating models of decision-making that can capture potentially inefficient behaviour in three different Work Packages: (1) Violence & Household Decision-Making; (2) Decision-Making at Divorce; (3) A General Model of Inefficient Households.

Each work package will be structured around three complementary activities:1.Developing high quality empirical facts about behaviour in these contexts using novel administrative data sources;2.Deriving the conditions under which new, innovative economic theories of behaviour can be tested and estimated; 3.Estimating the key economic parameters of interest to assess the positive and normative impact of policy proposals.

To enable me to exploit existing data sets and identifying variation that are particularly well suited to answering the research questions posed, each Work Package draws on data from a different OECD country: Finland (Work Package I), UK (Work Package II), and Sweden (Work Package III).