Patternsof rainfall insurance participation in rural India
This paper describes the contract design and institutional features of an innovative rainfall insurance policy offered to smallholder farmers in rural India, and presents preliminary evidence on the determinants of insurance participation. Insurance takeup is found to be decreasing in basis risk between insurance payouts and income fluctuations, increasing in household wealth and decreasing in the extent to which credit constraints bind. These results match with predictions of a simple neoclassical model appended with borrowing constraints. Other patterns are less consistent with the"benchmark"model; namely, participation in village networks and measures of familiarity with the insurance vendor are strongly correlated with insurance takeup decisions, and risk-averse households are found to be less, not more, likely to purchase insurance. We suggest that these results reflect household uncertainty about the product itself, given their limited experience with it.
|Date of creation:||01 Nov 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert M. Townsend, .
"Risk and Insurance in Village India,"
University of Chicago - Population Research Center
91-3a, Chicago - Population Research Center.
- John Cawley & Tomas Philipson, 1997.
"An Empirical Examination of Information Barriers to Trade inInsurance,"
University of Chicago - George G. Stigler Center for Study of Economy and State
132, Chicago - Center for Study of Economy and State.
- Tomas Philipson & John Cawley, 1999. "An Empirical Examination of Information Barriers to Trade in Insurance," American Economic Review, American Economic Association, vol. 89(4), pages 827-846, September.
- John Cawley & Tomas Philipson, 1996. "An Empirical Examination of Information Barriers to Trade in Insurance," NBER Working Papers 5669, National Bureau of Economic Research, Inc.
- Jonathan Morduch, 1995.
"Income Smoothing and Consumption Smoothing,"
Journal of Economic Perspectives,
American Economic Association, vol. 9(3), pages 103-114, Summer.
- Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
- Morduch, J., 1995. "Income Smoothing and Consumption Smoothing," Papers 512, Harvard - Institute for International Development.
- Jaap H. Abbring & Pierre-André Chiappori & Jean Pinquet, 2003.
"Moral Hazard and Dynamic Insurance Data,"
Journal of the European Economic Association,
MIT Press, vol. 1(4), pages 767-820, 06.
- Lim, Y. & Townsend, R.M., 1997.
"General Equilibrium Models of Financial Systems: Theory and Measurement in Village Economies,"
9716, Centro de Estudios Monetarios Y Financieros-.
- 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.
- Manski, C.F., 1991.
"Identification of Endogenous Social Effects: the Reflection Problem,"
9127, Wisconsin Madison - Social Systems.
- Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Wiley Blackwell, vol. 60(3), pages 531-42, July.
- repec:hal:journl:hal-00397121 is not listed on IDEAS
- Gadgil, Sulochana & Seshagiri Rao, P. R. & Narahari Rao, K., 2002. "Use of climate information for farm-level decision making: rainfed groundnut in southern India," Agricultural Systems, Elsevier, vol. 74(3), pages 431-457, December.
- Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4408. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.