Heterogeneity and Risk Sharing in Village Economies

Pierre Chiappori, Krislert Samphantharak, Sam Schulhofer-Wohl and Robert Townsend

No 16696, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D12 D14 D53 D81 D91 G11 O16 (search for similar items in EconPapers)
Date: 2011-01
New Economics Papers: this item is included in nep-agr, nep-cwa, nep-ias and nep-mfd
Note: AP EFG
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Citations: View citations in EconPapers (9)

Published as PierreâAndré Chiappori & Krislert Samphantharak & Sam SchulhoferâWohl & Robert M. Townsend, 2014. "Heterogeneity and risk sharing in village economies," Quantitative Economics, Econometric Society, vol. 5, pages 1-27, 03.

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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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