Income hiding and informal redistribution: A lab-in-the-field experiment in Senegal. Boltz, Marie, Karine Marazyan, J. & Villar, P. 2015.
Income hiding and informal redistribution: A lab-in-the-field experiment in Senegal [pdf]Paper  abstract   bibtex   
This paper estimates the hidden cost of informal redistribution in economies where people heavily rely on their social networks and have limited access to financial markets. It is based on a lab-in-the-field experiment conducted in Senegal which uniquely combines a small-scale randomized controlled trial (RCT) and a lab experiment. The lab component allows us to estimate the cost of this informal redistribution, by eliciting the willingness-to-pay to hide income, and to identify the relevant popu-lation: two-thirds of the experiment participants are ready to forgo up to 14% of their gains to keep them private. Based on the RCT component, we find that giving people fearing the redistributive pressure the opportunity to hide allows them to decrease by 27% the share of gains they to kin as measured out of the lab. They reallocate this extra money to health and personal expenses. This is the first paper to both identify the individual cost of this informal redistribution and to relate it to real-life resource-allocation decisions in a controlled setting. Ozier for their valuable comments. We also thank Virginie Comblon, Rozenn Hotte, Björn Nilsson, and Anne-Sophie Robilliard for their technical support in the field. We are grateful to seminar audiences at the University of Namur, the University Paris-Dauphine, the Paris School of Economics and Sciences Po, as well as participants at the 2013 and 2014 SEEDEC Conferences in Bergen, the 2015 CSAE Conference in Oxford, the ACDD 2015 in Strasbourg, the JMA 2015 in Montpellier, the AEL Conference 2015 in Kiel, the DIAL Conference 2015 in Paris, the Oxford Development workshop 2015, and the NEUDC 2015 conference in Brown University. This project received the IRB certification of J-Pal Europe (CE/2014-005). All remaining errors are ours.

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