A Dark Side of Social Capital? Kinship, Consumption, and Savings

We explore whether traditional sharing norms in kinship networks affect consumption and accumulation decisions of poor black households in KwaZulu-Natal, South Africa. Using a proxy for the number of family dependents, our results are consistent with the interpretation that households try to evade their 'sharing obligations' by (i) accumulating durables that are non-sharable at the expense of durables that may be shared and (ii) reducing savings in liquid assets. By attenuating accumulation incentives, kinship sharing may come at the expense of income growth - if so, a culturally-induced poverty trap can possibly eventuate. We demonstrate tentative evidence that more extensive kinship networks are associated with lower incomes.