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Do index insurance programs live up to their promises? Aggregating evidence from multiple experiments

Author

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  • Castaing, Pauline
  • Gazeaud, Jules

Abstract

Despite limited uptake, index insurance is often seen as one of the most remarkable innovations of the past decades to help smallholder farmers manage risks and boost their productive investments. In this paper, we use a Bayesian hierarchical model to aggregate evidence from eight experiments and assess the external validity of their results. We find that interventions expanding access to index insurance increase productive investments by 0.06–0.11 SD on average (equivalent to 8%–16% of the control mean). Heterogeneity in treatment effects across studies is high but imprecisely estimated, and controlling for basic, pre-registered household characteristics has no impact on these estimates. Effects on those who take up index insurance are larger but even more heterogeneous. We conclude that the existing evidence base offers limited insights to predict effects in new settings, and that policymakers should be cautious before investing in the widespread promotion of index insurance.

Suggested Citation

  • Castaing, Pauline & Gazeaud, Jules, 2025. "Do index insurance programs live up to their promises? Aggregating evidence from multiple experiments," Journal of Development Economics, Elsevier, vol. 175(C).
    • Handle: RePEc:eee:deveco:v:175:y:2025:i:c:s0304387825000525
    DOI: 10.1016/j.jdeveco.2025.103501
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    More about this item

    Keywords

    Index insurance; Agricultural decisions; External validity; Bayesian hierarchical modeling;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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