Intra-household Efficiency in Extended Family Households: Evidence from Rural India

The extended family household, in which multiple generations or married siblings of a family live together, is common in developing countries. We conducted a series of public goods experiments in such households in five villages in rural North India to shed light on decision-making efficiency within this household structure. In this experiment, we offered household members the choice to receive either a lower amount over which they have private control or a higher payout that becomes a common resource. We measure efficiency as the degree to which individuals are willing to forego personal rewards for larger, collective rewards. We find that relationships within extended households are not equally efficient, with the relationship between the daughter-in-law and mother-in-law particularly problematic. Supplementary survey and qualitative evidence points to the role of decision-making power, with young, married women lacking the power to assert their preferences in extended households and resorting to actions that reduce the overall efficiency of the household.