Financial risk-taking and differential bargaining power within households

by Dimitris Christelis, Dimitris Georgarakos & Tullio Jappelli
Posted on July 21, 2020

Does having more money, either earned or saved, make one partner in a couple more influential as far as economic decisions are concerned? How does within-couple inequality affect the degree of a couple's risk-taking, especially when it comes to financial investments? That’s what we wanted to find out in our short-term research project for the Think Forward Initiative.

One possibility is that the more unequal the ownership of economic resources between both partners, the more likely it is that the 'richer' partner will have the upper hand in determining how much to invest in risky financial assets such as stocks. If so, one would expect that the richer partner would be more likely to invest in risky financial assets, either alone or on behalf of his/her partner.1

Another possibility is that unequal ownership of economic resources within the couple could increase the economic insecurity of the 'poorer' partner, which could in turn make him/her more reluctant to contemplate undertaking financial risk, especially if the ownership of risky financial assets is joint. An unequal division of resources between the couple would also expose it to a higher overall risk, especially if partner incomes are highly correlated. Consequently, the economic resources of the richer partner would likely be more heavily invested in safer assets, in order to mitigate the financial insecurity of the poorer partner. Such de-risking of a household’s portfolio is particularly important in times of financial stress, such as the one we currently observe because of the coronavirus pandemic.

“How does unequal ownership of economic resources within couples influence financial risk-taking?”

Our research project

Whether unequal within-couple ownership of financial resources increases financial risk-taking, is an issue that needs to be investigated through empirical analysis. We explore this, using data (2002-2018) from the Household Survey of the Dutch National Bank, concentrating on the unequal distribution of bank account balances as an indication of the differential bargaining power possessed by both partners.

Typically, as pointed out in a survey by Chiappori and Meghir (2015), previous literature measures the bargaining power within the household through the partners’ income share, rather than through their asset share. Our survey data allow us to observe the financial assets of both partners in a couple, as well as all types of bank accounts (think of current or saving accounts), both jointly and separately owned.

To measure the unequal distribution of financial resources within the couple, we use the bank account balances reported by each partner as a share of the total amount of bank accounts owned by both partners, either individually or jointly. We believe that accumulated bank account balances can be more reliable indicators of financial wherewithal than income: as opposed to account balances, income is often volatile from year to year, and a large part of it is consumed anyway. Account balances, on the other hand, reflect earnings from several years back and provide a good indicator of households' ability to overcome financial difficulties, consequently maintaining or improving their standard of living.

Our sample consists of approximately 18,000 observations from 3,770 households, observed repeatedly from 2002 to 2018. Interestingly, our data (see Fig. 1) show that over time, the share of the bank accounts owned by the female partner in a couple increased significantly (over 5 percentage points), which could be an indication of the increasing earning power of Dutch women, as well as their propensity to save more than their partner.

The survey also allows us to observe household investment in risky financial assets such as stocks (directly held and mutual funds). These investments are recorded at household level, and may reflect both individual and joint ownership.

Figure 1: Share of bank accounts, women

Figure 1: Share of bank accounts, women

For our analysis, we focus on couples only. We estimate the effect of unequal ownership on investments in financial assets by associating the largest share of bank account balances (between both partners) with investment in risky financial asset ownership, through directly held stocks and mutual funds. We take advantage of the repeated observations provided by the households in our sample (on average 4.6 observations per household) to reduce biases in our results. Our preliminary findings suggest that an increase in the largest bank account share (which indicates an increase in within-couple inequality) goes hand in hand with a drop in the probability of investing in risky financial assets.


The result that increased within-couple inequality in economic resources is associated with less financial risk-taking suggests that households are inclined to de-risk their portfolio when a partner’s financial position worsens. This, in turn, implies that in times of financial distress - like during a pandemic - households are likely to disinvest from the risky financial assets. Such disinvestment could lead to a reduced standard of living in the long term, as risky financial assets have historically earned a higher rate of return than safer assets such as bonds, even after adjusting for risk. It can also lead to firms having more difficult access to funds obtained through the stock market.

During the current crisis, it is of vital importance to implement policies that help reduce financial hardship and income volatility, and also that encourage and safeguard the persistent attachment of individuals to the job market. This will likely lead to a lower within-household inequality in economic resources, making households more willing to participate to financial markets and undertake financial risk.

Dimitris Christelis is a Reader in Economics at the University of Glasgow

Dimitris Georgarakos is a Principal Economist at the European Central Bank

Tullio Jappelli is a Professor of Economics at the University of Naples Federico II


  1. There is by now a well-established strong positive association between risky financial asset ownership and ownership of economic resources.


  • Chiappori, P. A., & Meghir, C. (2015). Intrahousehold inequality. In Atkinson, A.B. & Bourguignon, F. (eds.). Handbook of Income Distribution, Elsevier, Amsterdam, pp. 1369-1418