Does Marriage Work as a Savings Commitment Device? : Experimental Evidence from Vietnam

We conducted a time discounting experiment with married couples, and examined how time preferences, particularly time inconsistency, affect intrahousehold financial decision making. Our experimental results suggest people are more patient when they make decisions jointly with their spouses. The analysis of survey data shows time-inconsistent individuals turn over a smaller percentage of their earnings to their spouses. Time-inconsistent husbands are more likely to keep cash within households compared with time-consistent husbands. Time-inconsistent individuals are given smaller amounts of allowances, but they tend to conceal money to compensate. Additionally, time-inconsistent subjects choose not to ask their spouses to keep their experimental earnings and save it for themselves in the experiment. This study shows marriage does not function (or may counteract) as a savings commitment device, especially for time-inconsistent individuals. This implies households need external savings commitment devices such as ROSCAs to protect money from spouses who have hyperbolic preferences. This is a preliminary working draft. Please do not cite without permission. ∗This research was supported by an internal fund from the Arizona State University to Tomomi Tanaka, and a grant from the Japan Society for the Promotion of Science (KAKENHI 20730198) to Hisaki Kono. We thank our research coordinator Nguyen Ho Anh Khoa, and research assistants Tran Ho Anh Khoa, Meghan McGinnis, Luong Thanh Phong, Thomas Saglimbene, Lam Van Thai, Pham Xuan Thanh, Le Canh Bich Tho, Dang Thi Diem Trang, Tran Thi Thanh Truc, Nguyen Thanh Huy, Tran Binh Diem Thuan, and Hoang Hai Yen for their excellent assistance.