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Formal Insurance and the Dynamics of Social Capital: Experimental Evidence from Uganda

Author

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  • Francesco Cecchi
  • Jan Duchoslav
  • Erwin Bulte

Abstract

We explore how the introduction of formal insurance affects the within-village dynamics of social capital in south-western Uganda. As a proxy for social capital, we use contributions in a public goods game. Consistent with existing evidence, our data suggest formal insurance crowds out social capital. However, and surprisingly, overall contributions to the common pot do not go down because insurance adopters reduce their contributions. Instead, social capital erodes because the uninsured, or the local poor, lower their contributions. We discuss what might explain this finding.

Suggested Citation

  • Francesco Cecchi & Jan Duchoslav & Erwin Bulte, 2016. "Formal Insurance and the Dynamics of Social Capital: Experimental Evidence from Uganda," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 25(3), pages 418-438.
    • Handle: RePEc:oup:jafrec:v:25:y:2016:i:3:p:418-438.
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    File URL: http://hdl.handle.net/10.1093/jae/ejw002
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    Cited by:

    1. Nikolov, Plamen & Bonci, Matthew, 2020. "Do public program benefits crowd out private transfers in developing countries? A critical review of recent evidence," World Development, Elsevier, vol. 134(C).
    2. Toman Barsbai & Victoria Licuanan & Andreas Steinmayr & Erwin Tiongson & Dean Yang, 2020. "Information and the Acquisition of Social Network Connections," NBER Working Papers 27346, National Bureau of Economic Research, Inc.
    3. A Stefano Caria & Simon Franklin & Marc Witte, 2018. "Searching with friends," CSAE Working Paper Series 2018-14, Centre for the Study of African Economies, University of Oxford.
    4. Nigus, Halefom & Nillesen, Eleonora & Mohnen, Pierre, 2018. "The effect of weather index insurance on social capital: Experimental evidence from Ethiopia," MERIT Working Papers 2018-007, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Strupat, Christoph & Klohn, Florian, 2018. "Crowding out of solidarity? Public health insurance versus informal transfer networks in Ghana," World Development, Elsevier, vol. 104(C), pages 212-221.
    6. Hanna Freudenreich & Marcela Ibanez & Stephan Dietrich & Oliver Musshoff, 2018. "Formal insurance, risk sharing, and the dynamics of other-regarding preferences," Department of Agricultural and Rural Development (DARE) Discussion Papers 266532, Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE).
    7. Temesgen Belissa & Robert Lensink & Anne Winkel, 2020. "Effects of Index Insurance on Demand and Supply of Credit: Evidence from Ethiopia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1511-1531, October.
    8. Putman, Daniel S., 2020. "The Scope of Risk Pooling," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304480, Agricultural and Applied Economics Association.
    9. Caria, Stefano & Franklin, Simon & Witte, Marc, 2020. "Searching with Friends," IZA Discussion Papers 13857, Institute of Labor Economics (IZA).

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