IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/dp2002-08.html
   My bibliography  Save this paper

Targeting and Informal Insurance

Author

Listed:
  • Ethan Ligon

Abstract

The standard method of testing for efficient risk-sharing in village economies does not allow one to identify vulnerable households, only to make statements about the average risk in the village, or of sub-groups identifiable on the basis of observables. Here, by working directly with inter-household consumption correlations we are able to identify households, which are probably exposed to unusually high amount of idiosyncratic risk. An obvious use for this identifying information involves targeted interventions to help those households.

Suggested Citation

  • Ethan Ligon, 2002. "Targeting and Informal Insurance," WIDER Working Paper Series DP2002-08, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2002-08
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/dp2002-08.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. Youngjae Lim & Robert Townsend, 1998. "General Equilibrium Models of Financial Systems: Theory and Measurement in Village Economies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 59-118, January.
    3. Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2002. "Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 209-244.
    4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    5. Newey, Whitney K & West, Kenneth D, 1987. "Hypothesis Testing with Efficient Method of Moments Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 777-787, October.
    6. Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
    7. Jean-Philippe Platteau, 1997. "Mutual insurance as an elusive concept in traditional rural communities," Journal of Development Studies, Taylor & Francis Journals, vol. 33(6), pages 764-796.
    8. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    9. Ethan Ligon, 1998. "Risk Sharing and Information in Village Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(4), pages 847-864.
    10. Ravallion, Martin, 1988. "Expected Poverty under Risk-Induced Welfare Variability," Economic Journal, Royal Economic Society, vol. 98(393), pages 1171-1182, December.
    11. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
    12. Attanasio, Orazio & Rios-Rull, Jose-Victor, 2000. "Consumption smoothing in island economies: Can public insurance reduce welfare?," European Economic Review, Elsevier, vol. 44(7), pages 1225-1258, June.
    13. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    14. Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
    15. Jyotsna Jalan & Martin Ravallion, 2000. "Is transient poverty different? Evidence for rural China," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 82-99.
    16. Narayana R. Kocherlakota, 1996. "Implications of Efficient Risk Sharing without Commitment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(4), pages 595-609.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefan Dercon, 2002. "Income Risk, Coping Strategies, and Safety Nets," The World Bank Research Observer, World Bank, vol. 17(2), pages 141-166, September.
    2. Matthew Jowett, 2004. "Theoretical insights into the development of health insurance in low-income countries," Working Papers 188chedp, Centre for Health Economics, University of York.
    3. Gisele Kamanou & Jonathan Morduch, 2002. "Measuring Vulnerability to Poverty," WIDER Working Paper Series DP2002-58, World Institute for Development Economic Research (UNU-WIDER).
    4. Heemskerk, Marieke & Norton, Anastasia & de Dehn, Lise, 2004. "Does Public Welfare Crowd Out Informal Safety Nets? Ethnographic Evidence from Rural Latin America," World Development, Elsevier, vol. 32(6), pages 941-955, June.
    5. Skoufias, Emmanuel & Quisumbing, Agnes R., 2003. "Consumption insurance and vulnerability to poverty: a synthesis of the evidence from Bangladesh, Ethiopia, Mali, Mexico, and Russia," FCND discussion papers 155, International Food Policy Research Institute (IFPRI).
    6. Rasmus Heltberg & Ana Mar�a Oviedo & Faiyaz Talukdar, 2015. "What do Household Surveys Really Tell Us about Risk, Shocks, and Risk Management in the Developing World?," Journal of Development Studies, Taylor & Francis Journals, vol. 51(3), pages 209-225, March.
    7. Raghav Gaiha & Katsushi Imai, 2008. "Measuring Vulnerability and Poverty: Estimates for Rural India," WIDER Working Paper Series RP2008-40, World Institute for Development Economic Research (UNU-WIDER).
    8. Katsushi Imai & Thankom Arun, 2008. "Does Microfinance Reduce Poverty in India?," Economics Discussion Paper Series 0814, Economics, The University of Manchester.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stefan Dercon, 2002. "Income Risk, Coping Strategies, and Safety Nets," The World Bank Research Observer, World Bank, vol. 17(2), pages 141-166, September.
    2. Dubois, Pierre, 2002. "Consommation, partage de risque et assurance informelle : développements théoriques et tests empiriques récents," L'Actualité Economique, Société Canadienne de Science Economique, vol. 78(1), pages 115-149, Mars.
    3. Christiaensen, Luc J.M. & Boisvert, Richard N., 2000. "On Measuring Household Food Vulnerability: Case Evidence from Northern Mali," Working Papers 127676, Cornell University, Department of Applied Economics and Management.
    4. Delpierre, Matthieu & Verheyden, Bertrand & Weynants, Stéphanie, 2016. "Is informal risk-sharing less effective for the poor? Risk externalities and moral hazard in mutual insurance," Journal of Development Economics, Elsevier, vol. 118(C), pages 282-297.
    5. Sarolta Laczo, 2010. "Estimating Dynamic Contracts: Risk Sharing in Village Economies," 2010 Meeting Papers 687, Society for Economic Dynamics.
    6. Mauricio Gallardo, 2018. "Identifying Vulnerability To Poverty: A Critical Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 1074-1105, September.
    7. Montalbano, Pierluigi, 2011. "Trade Openness and Developing Countries' Vulnerability: Concepts, Misconceptions, and Directions for Research," World Development, Elsevier, vol. 39(9), pages 1489-1502, September.
    8. Stefan Dercon & Pramila Krishnan, 2003. "Food aid and informal insurance," CSAE Working Paper Series 2003-01, Centre for the Study of African Economies, University of Oxford.
    9. Tobias Broer & Tessa Bold, 2015. "Risk-Sharing in Village Economies Revisited," 2015 Meeting Papers 1232, Society for Economic Dynamics.
    10. Marcel Fafchamps & Aditya Shrinivas, 2022. "Risk Pooling and Precautionary Saving in Village Economies," NBER Working Papers 30128, National Bureau of Economic Research, Inc.
    11. Stefan Dercon (QEH), "undated". "Vulnerability: a micro perspective," QEH Working Papers qehwps149, Queen Elizabeth House, University of Oxford.
    12. Grimm, Michael & Hartwig, Renate & Lay, Jann, 2017. "Does forced solidarity hamper investment in small and micro enterprises?," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 827-846.
    13. Ethan Ligon & Laura Schechter, 2002. "Measuring Vulnerability: The Director's Cut," WIDER Working Paper Series DP2002-86, World Institute for Development Economic Research (UNU-WIDER).
    14. van den Berg, Marrit & Fort, Ricardo & Burger, Kees, 2009. "Natural Hazards And Risk Aversion: Experimental Evidence From Latin America," 2009 Conference, August 16-22, 2009, Beijing, China 51394, International Association of Agricultural Economists.
    15. Manuela Angelucci & Giacomo De Giorgi, 2009. "Indirect Effects of an Aid Program: How Do Cash Transfers Affect Ineligibles' Consumption?," American Economic Review, American Economic Association, vol. 99(1), pages 486-508, March.
    16. Dercon, Stefan & De Weerdt, Joachim & Bold, Tessa & Pankhurst, Alula, 2006. "Group-based funeral insurance in Ethiopia and Tanzania," World Development, Elsevier, vol. 34(4), pages 685-703, April.
    17. Satya R. Chakravarty & Nachiketa Chattopadhyay & Jacques Silber & Guanghua Wan, 2016. "Measuring the impact of vulnerability on the number of poor: a new methodology with empirical illustrations," Chapters, in: Jacques Silber & Guanghua Wan (ed.), The Asian ‘Poverty Miracle’, chapter 4, pages 84-117, Edward Elgar Publishing.
    18. Ravi Kanbur, 2008. "Globalization, Growth, and Distribution," World Bank Publications - Books, The World Bank Group, number 28017.
    19. Xiao Yu Wang, 2014. "Risk Sorting, Portfolio Choice, and Endogenous Informal Insurance," NBER Working Papers 20429, National Bureau of Economic Research, Inc.
    20. Conning, Jonathan & Udry, Christopher, 2007. "Rural Financial Markets in Developing Countries," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 56, pages 2857-2908, Elsevier.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:dp2002-08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.