Let’s Talk About the Money: Spousal Communication, Expenditures and Farm Production

There is a burgeoning literature highlighting asymmetric information among household members. However, little is known about the source of the asymmetry and its effect on efficiency. Using a unique survey of Ghanaian households, we examine the accuracy of spousal cross-reports and the effect of discrepancies on farm production. We find that information problems pertain to scale, the quantity of resources, and scope, the distribution of resources, as well as allocation decisions on the margin (Engel curves). Moreover, we find that information asymmetries lead to inefficiency in production, and the effect is equivalent to about 15% of the variation across households. JEL Codes: D13; D82; O12