The effect of weather index insurance on social capital: Evidence from rural Ethiopia

Halefom Yigzaw Nigus, Eleonora Nillesen and Pierre Mohnen

Journal of Risk & Insurance, 2024, vol. 91, issue 1, 121-159

Abstract: We study the effect of weather index insurance (WII) uptake on social capital. We measure individual social capital using experimental and survey‐based measures and relate it to the actual purchase of WII. We use propensity score matching (PSM) and an instrumental variable (IV) to address endogeneity concerns. Our descriptive and PSM estimates show that WII uptake negatively and significantly affects social capital. We find that insured households contribute less to the public good than uninsured households. We also find qualitatively and quantitatively similar results using our IV approach, yet insufficient power renders most of our IV estimates insignificant. We however report robust significant effects of instrumented WII uptake on sociopsychological outcomes—WII uptake increases perceptions of self‐sufficiency and free‐riding behavior: these are potential channels through which a negative effect on social capital comes about. Although far from conclusive, our paper provides several pieces of evidence that suggest WII uptake negatively affects social capital.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jori.12454

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jrinsu:v:91:y:2024:i:1:p:121-159

Ordering information: This journal article can be ordered from
http://www.wiley.com/bw/subs.asp?ref=0022-4367

Access Statistics for this article

Journal of Risk & Insurance is currently edited by Joan T. Schmit

More articles in Journal of Risk & Insurance from The American Risk and Insurance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().