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Risk-Sharing Networks And Insurance Against Illness

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Author Info
Stefan Dercon (Centre for the Study of African Economies)
Joachim de Weerdt (Katholieke Universiteit Leuven, Belgium)

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Abstract

Most risk-sharing tests on developing country data are conducted at the level of the village; generally, the full risk-sharing hypothesis is rejected. This paper uses detailed data on all insurance networks within a village in Tanzania; networks are not clustered but largely overlapping. We test whether full risk-sharing occurs within these networks. We find that even within these smaller networks risk is not fully shared. In the event of a health shock, households reduce overall consumption: they cut back non-food consumption by roughly 30%, while protecting their food consumption.

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Paper provided by EconWPA in its series Development and Comp Systems with number 0409019.

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Length: 44 pages
Date of creation: 22 Sep 2004
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Handle: RePEc:wpa:wuwpdc:0409019

Note: Type of Document - pdf; pages: 44
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Related research
Keywords: full insurance hypothesis; risk-sharing; networks and health shocks;

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Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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    Other versions:
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    Other versions:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yann Bramoullé & Habiba Djebbari & Bernard Fortin, 2007. "Identification of Peer Effects through Social Networks," Cahiers de recherche 0705, CIRPEE. [Downloadable!]
    Other versions:
  2. Margherita Comola & Marcel Fafchamps, 2009. "Testing unilateral and bilateral link formation," PSE Working Papers 2009-30, PSE (Ecole normale supérieure). [Downloadable!]
  3. Santos, Paulo & Barrett, Chris, 2004. "Interest And Identity In Network Formation," 2004 Annual meeting, August 1-4, Denver, CO 19920, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  4. Attila Ambrus & Markus Mobius & Adam Szeidl, 2007. "Consumption Risk-sharing in Social Networks," Economics Working Papers 0079, Institute for Advanced Study, School of Social Science. [Downloadable!]
  5. Pramila Krishnan & Emanuela Sciubba, 2006. "Links and Architecture in Village Networks," Birkbeck Working Papers in Economics and Finance 0614, Birkbeck, Department of Economics, Mathematics & Statistics. [Downloadable!]
    Other versions:
  6. Yann Bramoullé & Bernard Fortin, 2009. "The Econometrics of Social Networks," Cahiers de recherche 0913, CIRPEE. [Downloadable!]
  7. Yann Bramoullé & Rachel Kranon, 2005. "Risk-Sharing Networks," Cahiers de recherche 0526, CIRPEE. [Downloadable!]
    Other versions:
  8. Ligon, Ethan, 2005. "Poverty and the Welfare Costs of Risk Associated with Globalization," Working Papers RP2005/57, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
    Other versions:
  9. Gabriela Flores & Jaya Krishnakumar & Owen O'Donnell & Eddy van Doorslaer, 2008. "Coping with health-care costs: implications for the measurement of catastrophic expenditures and poverty," Health Economics, John Wiley & Sons, Ltd., vol. 17(12), pages 1393-1412. [Downloadable!]
  10. Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Working Papers DT/2005/13, DIAL (Développement, Institutions & Analyses de Long terme). [Downloadable!]
    Other versions:
  11. Tesssa Bold & Stefan Dercon, 2009. "Contract Design in Insurance Groups," Economics Series Working Papers 421, University of Oxford, Department of Economics. [Downloadable!]
  12. Marcel Fafchamps & Marco J. van der Leij & Sanjeev Goyal, 2006. "Scientific Networks and Co-authorship," Economics Series Working Papers 256, University of Oxford, Department of Economics. [Downloadable!]
  13. Philippe LeMay-Boucher, 2007. "Insurance for the Poor: The Case of Informal Insurance Groups in Benin," CERT Discussion Papers 0707, Centre for Economic Reform and Transformation, Heriot Watt University. [Downloadable!]
  14. Julie Litchfield & Thomas McGregor, 2008. "Poverty in Kagera, Tanzania: Characteristics, Causes and Constraints," PRUS Working Papers 42, Poverty Research Unit at Sussex, University of Sussex. [Downloadable!]
  15. Sanjeev Goyal & Marcel Fafchamps & Marco J. van der Leij, 2006. "Matching and Network Effects," Economics Discussion Papers 611, University of Essex, Department of Economics. [Downloadable!]
    Other versions:
  16. Lei Pan, 2007. "Risk Pooling through Transfers in Rural Ethiopia," Tinbergen Institute Discussion Papers 07-014/2, Tinbergen Institute, revised 28 Sep 2007. [Downloadable!]
  17. Matuschke, Ira, 2008. "Evaluating the impact of social networks in rural innovation systems: An overview," IFPRI discussion papers 816, International Food Policy Research Institute (IFPRI). [Downloadable!]
  18. Christiaensen, Luc & Hoffmann, Vivian & Sarris, Alexander, 2007. "Gauging the welfare effects of shocks in rural Tanzania," Policy Research Working Paper Series 4406, The World Bank. [Downloadable!]
  19. Tessa Bold, 2008. "Implicationsof Endogenous Group Formation for Efficient Risk-Sharing," Economics Series Working Papers 387, University of Oxford, Department of Economics. [Downloadable!]
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