Informal Risk Sharing, Index Insurance, and Risk Taking in Developing Countries

摘要

The penetration of formal insurance markets is puzzlingly low in agrarian areas of developing countries, although agriculture is highly susceptible to fluctuations in weather. And, despite the fact that most rural households participate in informal risk sharing, farmers appear to sacrifice profitability to lower their risk. To understand the complex interactions between informal risk sharing, formal insurance, and risk taking, we have randomized offers of rainfall insurance contracts to a set of households living in Indian villages for which we had preexisting census data that permits a rich characterization of the nature and extent of informal risk sharing within readily identifiable, exogenously formed networks: the subcaste, or jati. This article describes preliminary findings from three studies undertaken or under way (Mobarak and Rosenzweig 2012, 2013a, 2013b) that use the resulting experimental and nonexperimental data.