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Is a friend in need a friend indeed? Inclusion and exclusion in mutual insurance networks in southern Ghana

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  • Goldstein, Markus
  • de Janvry, Alan
  • Sadoulet, Elisabeth

Abstract

Mutual insurance has been shown, theoretically and empirically, to be incomplete and limited by asymmetric information and lack of enforcement mechanisms. While some research has shown that networks based on kinship, neighborhood and ethnicity may provide a locus of insurance and thus a way of overcoming these problems, these studies are not fine enough to predict the inclusion and exclusion of individuals. Using data from rural Ghana, we examine the role of social relations in obtaining assistance in the face of shocks. We examine this at both the intra-household and community levels. At the household level, asking for and receiving assistance from the spouse is related to gender, the quality of the marital relationship, and the wealth of household members. At the community level, asking for and receiving help are correlated with membership in a major lineage, participation in secular organizations, the individual¿s fostering history, and anticipated land inheritance. We also show that these factors differ depending on whether the shortfall was for a household or personal item (as perceived by the respondent). This work helps us to identify individuals who are more likely to fall outside of mutual insurance networks and require interventions to help them cope with risk

Suggested Citation

  • Goldstein, Markus & de Janvry, Alan & Sadoulet, Elisabeth, 2002. "Is a friend in need a friend indeed? Inclusion and exclusion in mutual insurance networks in southern Ghana," LSE Research Online Documents on Economics 6647, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:6647
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    References listed on IDEAS

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    1. Deaton, Angus, 1992. " Household Saving in LDCs: Credit Markets, Insurance and Welfare," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(2), pages 253-273.
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    Cited by:

    1. Isabel Fischer & Tina Beuchelt & Tom Dufhues & Gertrud Buchenrieder, 2010. "Risk management networks of ethnic minorities in Viet Nam," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 17(2), pages 83-118, December.
    2. Margherita Comola, 2010. "The network structure of mutual support links: Evidence from rural Tanzania," Working Papers halshs-00585968, HAL.

    More about this item

    Keywords

    Risk; social setworks; sutual insurance; intrahousehold allocation;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D1 - Microeconomics - - Household Behavior
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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