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Consumption insurance under uncertainty: The case of Nepal during Maoist insurgency

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  • Nepal, Mani
  • Bohara, Alok K

Abstract

We test the implication of the full consumption insurance hypotheses in the presence of violent conflict due to the Maoist People’s War using household survey data from Nepal. We find that food consumption is more vulnerable than non-food consumption if we do not account for the non-linear relationship between the consumption and the level of violence. The level of food consumption vulnerability, however, is not severe for the households with low levels of education and income. Contrary to the common notion of vulnerability of low-caste/ethnic group, we find complete consumption insurance for this socially excluded social group. This result is surprising as the socially disadvantaged caste/ethnic group has been considered more vulnerable in Nepal.

Suggested Citation

  • Nepal, Mani & Bohara, Alok K, 2015. "Consumption insurance under uncertainty: The case of Nepal during Maoist insurgency," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 5(1), pages 1-31.
  • Handle: RePEc:gok:ijdcv1:v:5:y:2015:i:1:p:1-31
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    More about this item

    Keywords

    Consumption Insurance; Nepal; Violent Conflict; Consumption Vulnerability;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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