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Understanding Pastoralists’ Dynamic Insurance Uptake Decisions: Evidence from Four-year Panel Data in Ethiopia

Author

Listed:
  • Kazushi Takahashi

    (National Graduate Institute for Policy Studies, Tokyo, Japan)

  • Yuma Noritomo

    (Graduate School of Economics, The University of Tokyo)

  • Munenobu Ikegami

    (Faculty of Economics, Hosei University)

  • Nathaniel D. Jensen

    (International Livestock Research Institute)

Abstract

Using a unique data set covering four years and six semi-annual sales periods of an index-based livestock insurance (IBLI) product in southern Ethiopia, we examine the dynamics of pastoralists’ demand for IBLI. We find that: (1) there is intertemporal dependence of an uptake decision, represented by correlations of unobserved household factors over time; (2) conditional on previous purchase decisions, factors related to continuing the purchase of IBLI to augment existing coverage and replace lapsing contracts differ significantly; (3) controlling for time-invariant household-fixed effects, neither a one-shot subsidy nor the uptake of others in one’s social network influence subsequent demand, whereas less vegetation and reduced insurance premiums induce households to purchase IBLI. Overall, our study provides rigorous micro-evidence to better understand the dynamic uptake of IBLI and signifies the importance of an empirical analysis that takes into account the dynamic demand structure.

Suggested Citation

  • Kazushi Takahashi & Yuma Noritomo & Munenobu Ikegami & Nathaniel D. Jensen, 2019. "Understanding Pastoralists’ Dynamic Insurance Uptake Decisions: Evidence from Four-year Panel Data in Ethiopia," GRIPS Discussion Papers 19-22, National Graduate Institute for Policy Studies.
    • Handle: RePEc:ngi:dpaper:19-22
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    Cited by:

    1. Vigani, Mauro & Khafagy, Amr & Berry, Robert, 2024. "Public spending for agricultural risk management: Land use, regional welfare and intra-subsidy substitution," Food Policy, Elsevier, vol. 123(C).
    2. Ruggiero Rippo & Simone Cerroni, 2023. "Farmers' participation in the Income Stabilisation Tool: Evidence from the apple sector in Italy," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(1), pages 273-294, February.
    3. World Bank, 2022. "Improving the Resilience of Pastoral Cattle Production in Southern Ethiopia," World Bank Publications - Reports 38471, The World Bank Group.
    4. Stoeffler, Quentin & Opuz, Gülce, 2022. "Price, information and product quality: Explaining index insurance demand in Burkina Faso," Food Policy, Elsevier, vol. 108(C).
    5. Rippo, Ruggiero & Cerroni, Simone, 2021. "Farmers’ Participation in the Income Stabilization Tool: Evidence from the Apple Sector in Italy," 2021 Conference, August 17-31, 2021, Virtual 315191, International Association of Agricultural Economists.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • 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

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