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
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 2012 erstellt
Description:
Why do many households remain exposed to large exogenous sources 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. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to U.S. insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints and limited salience are significant non-price frictions that constrain demand. We suggest contract design improvements to mitigate these frictions