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Risk and Insurance in Village India

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  • Robert M. Townsend

Abstract

The full insurance model is tested using data from three poor, high-risk villages in the semi-arid tropics of southern India. The model presented here incorporates a number of salient features of the actual village economies. Although the model is rejected statistically, it does provide a surprisingly good benchmark. Household consumptions comove with village average consumption. More clearly, household consumptions are not much influenced by contemporaneous own income, sickness, unemployment, or other idiosyncratic shocks, controlling for village consumption (i.e., for village-level risk). There is evidence that the landless are less well insured than their village neighbors in one of the three villages. Copyright 1994 by The Econometric Society.

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Paper provided by Chicago - Population Research Center in its series University of Chicago - Population Research Center with number 91-3a.

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Handle: RePEc:fth:chiprc:91-3a

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