Chiappori, Pierre-André
[Author]
;
Samphantharak, Krislert
[Other];
Townsend, Robert M.
[Other];
Schulhofer-Wohl, Sam
[Other]National Bureau of Economic Research
Heterogeneity and Risk Sharing in Village Economies
imprint:
Cambridge, Mass: National Bureau of Economic Research, January 2011
Published in:NBER working paper series ; no. w16696
Extent:
1 Online-Ressource
Language:
English
DOI:
10.3386/w16696
Identifier:
Reproduction note:
Hardcopy version available to institutional subscribers
Origination:
Footnote:
Mode of access: World Wide Web
System requirements: Adobe [Acrobat] Reader required for PDF files
Description:
We measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model and complement the results with a measure based on optimal portfolio choice. Among households with relatives living in the same village, full insurance cannot be rejected, suggesting that relatives provide something close to a complete-markets consumption allocation. There is substantial heterogeneity in risk preferences estimated from the full-insurance model, positively correlated in most villages with portfolio-choice estimates. The heterogeneity matters for policy: Although the average household would benefit from eliminating village-level risk, less-risk-averse households who are paid to absorb that risk would be worse off