Who Decides? Bargaining Inside the Household

Why it matters which family member controls money, and what evidence shows about income paid to mothers versus fathers.

Economists once treated a household as if it were a single person with one set of preferences. This is called the unitary model. It assumed that it did not matter who in the family earned or received money, because all income went into one shared pot. Evidence has shown that this is often not true.

Evidence that control matters

A famous study by Shelly Lundberg, Robert Pollak and Terence Wales looked at a change in the United Kingdom in the late 1970s. A child allowance that had mostly been paid through fathers’ pay packets as a tax reduction was replaced by a cash child benefit paid directly to mothers. After the change, spending on women’s and children’s clothing rose relative to men’s clothing. If all income were pooled, who received the money should not have mattered.

Studies in many developing countries have found similar patterns: money controlled by women is more often spent on children’s food, health and schooling.

Collective models

Economists now often use collective models, in which family members have their own preferences and reach decisions through a kind of negotiation. Each person’s bargaining power depends on things like their own income, their options if the relationship ended, and social norms.

This has practical consequences. Many cash transfer programmes, including Mexico’s Progresa and Brazil’s Bolsa Família, pay benefits mainly to mothers, partly because of this evidence.

The same money, different spending

Imagine a government gives a family an extra 100 dollars a month. If it is paid into the father's account, some goes to things he values more. If it is paid to the mother, a larger share may go to children's clothes, school supplies or food. The total income is the same, but where it lands changes how it is spent.

Beyond money

Bargaining power affects more than spending. It shapes who does housework, who gets to work outside the home, and whether children, especially girls, stay in school. Policies that raise women’s earnings or legal rights, such as equal inheritance laws, can shift these decisions too.

Assuming families always share everything equally

Many families do pool money and share decisions. But research shows that this is not guaranteed. Treating a household as one unit can hide inequality inside it, such as women or girls receiving less food or healthcare than men or boys in the same home.

Key takeaways

The unitary model assumes a household acts as one person with pooled income.
Evidence, including a UK child benefit change, shows it matters who receives the money.
Collective models treat family decisions as negotiations shaped by bargaining power.
Many cash transfer programmes pay mothers because of this evidence.