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Risk-Sharing Networks And Insurance Against Illness

  • Stefan Dercon

    (Centre for the Study of African Economies)

  • Joachim de Weerdt

    (Katholieke Universiteit Leuven, Belgium)

Most risk-sharing tests on developing country data are conducted at the level of the village; generally, the full risk-sharing hypothesis is rejected. This paper uses detailed data on all insurance networks within a village in Tanzania; networks are not clustered but largely overlapping. We test whether full risk-sharing occurs within these networks. We find that even within these smaller networks risk is not fully shared. In the event of a health shock, households reduce overall consumption: they cut back non-food consumption by roughly 30%, while protecting their food consumption.

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File URL: http://econwpa.repec.org/eps/dev/papers/0409/0409019.pdf
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Paper provided by EconWPA in its series Development and Comp Systems with number 0409019.

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Length: 44 pages
Date of creation: 22 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpdc:0409019
Note: Type of Document - pdf; pages: 44
Contact details of provider: Web page: http://econwpa.repec.org

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  11. Alderman, Harold & Paxson, Christina H & DEC, 1992. "Do the poor insure? A synthesis of the literature on risk and consumption in developing countries," Policy Research Working Paper Series 1008, The World Bank.
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