Do Peer Effects Influence the Household Bargain? Evidence from Children's Food Consumption in India

This paper uses primary data on women’s social networks to estimate causal peer effects in the household bargain. Using an extension of a spatial weighting technique that relies on friends-of-friends to identify peer effects, we examine how a woman’s friends’ participation in an education program affects her physical mobility, access to outside employment, and probability of working outside the household, as well as her children’s food consumption. Results show that peer effects have a significant impact on all proxies of female bargaining power. We decompose the overall peer effects into those on participants and nonparticipants, and focus on the effects on non-participant women who have participant friends. Results are consistent with the weak directionality assumption required for the identification of causal peer effects that participants inform and empower their non-participants friends, and not the other way around. Then, using household fixed effects, we find an overall positive effect of the mother’s participant friends on children’s food consumption. In particular, we find that the sons and daughters of non-participants who have participant friends eat more similar diets than sons and daughters of non-participants who have no participant friends. Finally, in heterogeneity analysis, we combine the Nash bargaining framework with demographic diffusion literature and identity economics to define and provide suggestive empirical evidence on three ways in which networks affect household decision making: (1) information, (2) influence, and (3) identity. While this analysis refrains from making welfare conclusions, our results highlight the presence of significant and complex peer effects in the household bargain. JEL Codes: D13, D85, J13, O15 ∗Kandpal is an economist in the Development Economics Research Group of The World Bank. Baylis is associate professor, Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign. This research solely reflects authors’ opinions, not those of The World Bank Group. Corresponding author email ekandpal@worldbank.org. The authors are grateful to Mary Arends-Kuenning, Kathleen Beegle, Jishnu Das, Alain de Janvry, Quy-Toan Do, Jed Friedman, Don Fullerton, Phil Garcia, Shweta Gaonkar, Susan Godlonton, Markus Goldstein, Karla Hoff, Yusuke Kuwayama, Angelo Mele, Annamaria Milazzo, Nolan Miller, Carl Nelson, Espen Beer Prydz, Gil Shapira, Parvati Singh, Thomas Walker, Alex Winter-Nelson, and participants at the World Bank Applied Micro Research and IFPRI-3ie seminars, and the NEUDC 2010, AAEA 2010, PAA 2011, MEA 2011, and AEA 2012 conferences for their comments. We extend our deepest thanks to Sumita Kandpal and the program officials of Mahila Samakhya, Uttarakhand, Geeta Gairola, Basanti Pathak, and Preeti Thapliyal, in particular. We also gratefully acknowledge financial support from the University of Illinois Research Board, the Women and Gender in Global Perspectives’ Goodman Fellowship and Due Ferber International Research Award, the Survey Research Laboratory’s Seymour Sudman Dissertation Award, and the College of ACES AYRE Fellowship.