Cole, Shawn Allen
[Author]
;
Giné, Xavier
[Other];
Tobacman, Jeremy
[Other];
Topalova, Petia B.
[Other];
Townsend, Robert M.
[Other];
Vickery, James I.
[Other]
Barriers to Household Risk Management
: Evidence from India
Published in:World Bank Policy Research Working Paper ; No. 5504
Extent:
1 Online-Ressource (40 p)
Language:
English
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 1, 2010 erstellt
Description:
Why do many households remain exposed to large exogenous sources of non-systematic income risk? This paper uses 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. The analysis finds that demand is significantly price-elastic, but that even if insurance were offered with payout ratios similar to US, widespread coverage would not be achieved. The paper identifies key non-price frictions that limit demand: liquidity constraints, particularly among poor households, lack of trust, and limited salience. The authors suggest potential improvements in contract design to mitigate these frictions