RISK-SHARING NETWORKS AND INSURANCE AGAINST ILLNESS

Stefan Dercon () and Joachim De Weerdt

Development and Comp Systems from EconWPA

Abstract: 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.

Keywords: full insurance hypothesis; risk-sharing; networks and health shocks (search for similar items in EconPapers)
JEL-codes: D12 O12 O15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-ias
Date: 2004-09-22
Note: Type of Document - pdf; pages: 44
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http://129.3.20.41/eps/dev/papers/0409/0409019.pdf (application/pdf)

Related works:
Journal Article: Risk-sharing networks and insurance against illness (2006)
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