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Background Risk of Food Insecurity and Insurance Behaviour: Evidence from the West Bank


  • Cavatorta, Elisa

    () (SOAS, University of London)

  • Pieroni, Luca

    () (University of Perugia)


This paper explores behavioural changes resulting from the presence of a back-ground risk. Due to markets incompleteness, not all risks are insurable. The literature suggests that, according to the structure of preferences, agents bearing a background uninsurable risk are less willing to bear other insurable risks and increase their demand for insurance. The empirical evidence of this effect is limited and, despite the relevance of this question, unexplored in developing countries. This paper fills this gap. It explores the effect of a background risk on the decision to buy health insurance using household data from the Palestinian Territories. We consider the risk of food insecurity as a background uninsurable risk. Using a bivariate probit model, we find that the propensity to buy health insurance is positively affected by the presence of a background risk of food insecurity. When allowing the back-ground risk to vary in intensity, we find that the propensity to insure is higher as the background risk becomes more intense. These results are robust to alternative indicators of background risk. The study shows that, in presence of background risks, there might be incentive changes towards the desirability of insurance that have implications for policy design.

Suggested Citation

  • Cavatorta, Elisa & Pieroni, Luca, 2012. "Background Risk of Food Insecurity and Insurance Behaviour: Evidence from the West Bank," NEPS Working Papers 6/2012, Network of European Peace Scientists.
  • Handle: RePEc:ris:nepswp:2012_006

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    References listed on IDEAS

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    Cited by:

    1. d'Agostino, Giorgio & Pieroni, Luca & Scarlato, Margherita, 2013. "Social Protection and Food Security in Sub-Saharan Africa: An Evaluation of Cash Transfer Programmes," MPRA Paper 49536, University Library of Munich, Germany.
    2. Petrolia, Daniel R., 2016. "Risk preferences, risk perceptions, and risky food," Food Policy, Elsevier, vol. 64(C), pages 37-48.

    More about this item


    Background Risk; Food Insecurity; Health Insurance; Bivariate Probit;

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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