Hidden income and its impact on expenditure patterns in Uganda

Abstract

This study presents quantitative insights into the willingness of women and men to hide income from their spouse, how socio-demographic and psycho-social factors correlate to the willingness to hide income, and how hiding that income influences expenditure patterns. Using data from 422 households in rural Uganda and employing an established revealed preference approach, the Becker-DeGroot-Marschak (BDM) mechanism, we show that both women and men seek to hide income from their spouse at substantial potential cost. We report an average willingness to pay (WTP) of 49% of the endowment offered, with 99% of the participants stating a positive WTP for hidden income. The correlates with demand for hidden income differ in terms of size and significance across genders and include perceived marriage quality, self-control, savings group membership, and empowerment over purchasing decisions. Results show that women who received income in private have a higher public to private spending ratio and higher transfers to their social network. Our study contributes to the literature on intra-household resource allocation in developing countries by studying the demand for hidden income between co-habiting spouses, correlates with the demand for hidden income, and the link between hidden income and subsequent spending patterns in rural Uganda.