Barriers to Household Risk Management: Evidence from India
Why do many households remain exposed to large exogenoussources of non-systematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product. We find demand is signif...
| Main Authors: | , , , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
| Published: |
Taylor & Francis Group
2012
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| Online Access: | http://hdl.handle.net/1721.1/73597 https://orcid.org/0000-0002-1528-8102 |
| _version_ | 1826204966225707008 |
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| author | Cole, Shawn Gine, Xavier Tobacman, Jeremy Topalova, Petia Townsend, Robert Vickery, James |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Cole, Shawn Gine, Xavier Tobacman, Jeremy Topalova, Petia Townsend, Robert Vickery, James |
| author_sort | Cole, Shawn |
| collection | MIT |
| description | Why do many households remain exposed to large exogenoussources of non-systematic
income risk? We use a series of randomized field experiments in rural India to test the
importance of price and non-price factors in the adoption of an innovative rainfall
insurance product. We find demand is significantly price-elastic, but that even if
insurance were offered with payout ratios similar to US, widespread coverage would not
be achieved. We then identify key non-price frictions that limit demand: liquidity
constraints, particularly among poor households, lack of trust, and limited salience. We
suggest potential improvements in contract design to mitigate these frictions. |
| first_indexed | 2024-09-23T13:04:26Z |
| format | Article |
| id | mit-1721.1/73597 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T13:04:26Z |
| publishDate | 2012 |
| publisher | Taylor & Francis Group |
| record_format | dspace |
| spelling | mit-1721.1/735972022-10-01T12:54:40Z Barriers to Household Risk Management: Evidence from India Cole, Shawn Gine, Xavier Tobacman, Jeremy Topalova, Petia Townsend, Robert Vickery, James Massachusetts Institute of Technology. Department of Economics Townsend, Robert Townsend, Robert Why do many households remain exposed to large exogenoussources of non-systematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product. We find demand is significantly price-elastic, but that even if insurance were offered with payout ratios similar to US, widespread coverage would not be achieved. We then identify key non-price frictions that limit demand: liquidity constraints, particularly among poor households, lack of trust, and limited salience. We suggest potential improvements in contract design to mitigate these frictions. Switzerland. State Secretariat for Economic Affairs Global Association of Risk Professionals Bill & Melinda Gates Foundation (Consortium on Financial Systems and Poverty grant) 2012-10-04T14:53:23Z 2012-10-04T14:53:23Z 2013-1 2010-12 Article http://purl.org/eprint/type/JournalArticle 0003–6846 1466–4283 http://hdl.handle.net/1721.1/73597 Cole, Shawn, Xavier Giné, Jeremy Tobacman, Petia Topalova, Robert Townsend, and James Vickery. 2013. "Barriers to Household Risk Management: Evidence from India." American Economic Journal: Applied Economics, 5(1): 104-35. https://orcid.org/0000-0002-1528-8102 en_US http://dx.doi.org/10.1257/app.5.1.104 American Economic Journal: Applied Economics Creative Commons Attribution-Noncommercial-Share Alike 3.0 http://creativecommons.org/licenses/by-nc-sa/3.0/ application/pdf Taylor & Francis Group MIT web domain |
| spellingShingle | Cole, Shawn Gine, Xavier Tobacman, Jeremy Topalova, Petia Townsend, Robert Vickery, James Barriers to Household Risk Management: Evidence from India |
| title | Barriers to Household Risk Management: Evidence from India |
| title_full | Barriers to Household Risk Management: Evidence from India |
| title_fullStr | Barriers to Household Risk Management: Evidence from India |
| title_full_unstemmed | Barriers to Household Risk Management: Evidence from India |
| title_short | Barriers to Household Risk Management: Evidence from India |
| title_sort | barriers to household risk management evidence from india |
| url | http://hdl.handle.net/1721.1/73597 https://orcid.org/0000-0002-1528-8102 |
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