Heterogeneity and risk sharing in village economies

Pierre Chiappori, Krislert Samphantharak and Sam Schulhofer-Wohl
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Sam Schulhofer-Wohl: https://www.dallasfed.org/fed/leadership/schulhofer-wohl

No 683, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: We measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model and complement the results with a measure based on optimal portfolio choice. Among households with relatives living in the same village, full insurance cannot be rejected, suggesting that relatives provide something close to a complete-markets consumption allocation. There is substantial heterogeneity in risk preferences estimated from the full-insurance model, positively correlated in most villages with portfolio-choice estimates. The heterogeneity matters for policy: Although the average household would benefit from eliminating village-level risk, less-risk-averse households who are paid to absorb that risk would be worse off.

Date: 2011
New Economics Papers: this item is included in nep-agr, nep-ias and nep-mfd
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Heterogeneity and risk sharing in village economies (2014)
Working Paper: Heterogeneity and risk sharking in village economies (2013)
Working Paper: Heterogeneity and Risk Sharing in Village Economies (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:683

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