UCLA

Outcomes for children depend importantly on parental decisions regarding inputs. This relationship is perhaps most obvious in developing countries where families face liquidity constraints and income uncertainty. To better understand potential risk sharing mechanisms within the household, I first present theoretical evidence of the relationship between a parent’s risk aversion and child quality in the context of a collective household model. I then estimate the effect of an experimental measure of risk aversion on a child’s well-being using the Mexican Family Life Survey. I find that a mother and father’s risk aversion increase investments in male children and decrease investments in female children, which is consistent with the patterns of old age support in Mexico.

In my second chapter, I examine whether HIV testing leads to revisions in the subjective likelihood of being HIV positive as well as the likelihood of surviving across various time horizons. This study is based on the Malawi Diffusion and Ideational Change Project (MDICP), which allows me to use randomized financial incentives as instrumental variables for the decision to learn one’s HIV status. I find that women who learn their HIV negative status believe they are negative at the time of testing but appear to overestimate their likelihood of having contracted HIV in the two-year period after learning their HIV status.

My third chapter examines the relationship between learning one’s HIV negative status and decisions made within households in the MDICP. Using the financial incentives as instrumental variables for the decision to learn one’s HIV status, we find that there is no effect on marital stability two years after a woman learns her HIV negative status, but that the marriage is less likely to stay intact if the husband discovers he is HIV negative. We also find a significant increase in the share of expenditures that are spent on children's schooling and a decrease in the share spent on children's medical expenditures. This paper illustrates that HIV testing can be an effective policy tool for increasing the incentives to invest in children’s welfare and human capital.