Barriers to Household Risk Management: Evidence from India

American Economic Journal: Applied Economics - Tập 5 Số 1 - Trang 104-135 - 2013
Shawn Cole1,2, Xavier Giné3, Jeremy Tobacman4, Petia Topalova5, Robert Townsend6, James Vickery7
1HARVARD U
2Harvard Business School, Baker Library 271, Soldiers Field, Boston, MA 02163.
3World Bank, 1818 H Street, N.W. Washington, DC, 20433
4Business Economics and Public Policy Department, The Wharton School, University of Pennsylvania, Philadelphia, PA 19104.
5IMF; International Monetary Fund, 700 19th Street, N.W., Washington, DC 20431.
6MIT; Massachusetts Institute of Technology, Department of Economics, 50 Memorial Drive, Cambridge, MA 02142.
7Federal Reserve Bank of New York, Research and Statistics Group, 33 Liberty Street, New York, NY 10045.

Tóm tắt

Why do many households remain exposed to large exogenous sources of nonsystematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and nonprice factors in the adoption of an innovative rainfall insurance product. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to US insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints, and limited salience are significant nonprice frictions that constrain demand. We suggest possible contract design improvements to mitigate these frictions. (JEL D14, D81, O12, O13, O16, O18, Q12)

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Thông tin xuất bản

American Economic Journal: Applied Economics

Tập 5 Số 1

104-135

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