Heterogeneity and risk sharing in village economies
We show how to use panel data on household consumption to directly estimate households' risk preferences. Specifically, we measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model, which we then test allowing for this heterogeneity. There is subst...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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The Econometric Society
2015
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| Online Access: | http://hdl.handle.net/1721.1/96171 https://orcid.org/0000-0002-1528-8102 |
| _version_ | 1811075337732227072 |
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| author | Chiappori, Pierre-Andre Samphantharak, Krislert Schulhofer-Wohl, Sam Townsend, Robert |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Chiappori, Pierre-Andre Samphantharak, Krislert Schulhofer-Wohl, Sam Townsend, Robert |
| author_sort | Chiappori, Pierre-Andre |
| collection | MIT |
| description | We show how to use panel data on household consumption to directly estimate households' risk preferences. Specifically, we measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model, which we then test allowing for this heterogeneity. There is substantial, statistically significant heterogeneity in estimated risk preferences. Full insurance cannot be rejected. As the risk-sharing as-if-complete-markets theory might predict, estimated risk preferences are unrelated to wealth or other characteristics. The heterogeneity matters for policy: Although the average household would benefit from eliminating village-level risk, less-risk-averse households that are paid to absorb that risk would be worse off by several percent of household consumption. |
| first_indexed | 2024-09-23T10:04:08Z |
| format | Article |
| id | mit-1721.1/96171 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T10:04:08Z |
| publishDate | 2015 |
| publisher | The Econometric Society |
| record_format | dspace |
| spelling | mit-1721.1/961712022-09-26T15:30:54Z Heterogeneity and risk sharing in village economies Chiappori, Pierre-Andre Samphantharak, Krislert Schulhofer-Wohl, Sam Townsend, Robert Massachusetts Institute of Technology. Department of Economics Townsend, Robert We show how to use panel data on household consumption to directly estimate households' risk preferences. Specifically, we measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model, which we then test allowing for this heterogeneity. There is substantial, statistically significant heterogeneity in estimated risk preferences. Full insurance cannot be rejected. As the risk-sharing as-if-complete-markets theory might predict, estimated risk preferences are unrelated to wealth or other characteristics. The heterogeneity matters for policy: Although the average household would benefit from eliminating village-level risk, less-risk-averse households that are paid to absorb that risk would be worse off by several percent of household consumption. 2015-03-25T15:10:11Z 2015-03-25T15:10:11Z 2014-03 2013-06 Article http://purl.org/eprint/type/JournalArticle 17597323 1759-7331 http://hdl.handle.net/1721.1/96171 Chiappori, Pierre-André, Krislert Samphantharak, Sam Schulhofer-Wohl, and Robert M. Townsend. “Heterogeneity and Risk Sharing in Village Economies.” Quantitative Economics 5, no. 1 (March 2014): 1–27. https://orcid.org/0000-0002-1528-8102 en_US http://dx.doi.org/10.3982/qe131 Quantitative Economics Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf The Econometric Society MIT web domain |
| spellingShingle | Chiappori, Pierre-Andre Samphantharak, Krislert Schulhofer-Wohl, Sam Townsend, Robert Heterogeneity and risk sharing in village economies |
| title | Heterogeneity and risk sharing in village economies |
| title_full | Heterogeneity and risk sharing in village economies |
| title_fullStr | Heterogeneity and risk sharing in village economies |
| title_full_unstemmed | Heterogeneity and risk sharing in village economies |
| title_short | Heterogeneity and risk sharing in village economies |
| title_sort | heterogeneity and risk sharing in village economies |
| url | http://hdl.handle.net/1721.1/96171 https://orcid.org/0000-0002-1528-8102 |
| work_keys_str_mv | AT chiapporipierreandre heterogeneityandrisksharinginvillageeconomies AT samphantharakkrislert heterogeneityandrisksharinginvillageeconomies AT schulhoferwohlsam heterogeneityandrisksharinginvillageeconomies AT townsendrobert heterogeneityandrisksharinginvillageeconomies |