Subsidy Policies and Insurance Demand

Jing Cai, Alain de Janvry () and Elisabeth Sadoulet ()

American Economic Review, 2020, vol. 110, issue 8, 2422-53

Abstract: Using data from a two-year pricing experiment, we study the impact of subsidy policies on weather insurance take-up. Results show that subsidies increase future insurance take-up through their influence on payout experiences. Exploring mechanisms of the payout effect, we find that for households that randomly benefited from financial education, receiving a payout provides a one-time learning experience that improves take-up permanently. In contrast, households with poor insurance knowledge continuously update take-up decisions based on recent experiences with disasters and payouts. Combining subsidy policies with financial education can thus be effective in promoting long-run insurance adoption.

JEL-codes: G22 G52 G53 Q54 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (14)

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Working Paper: Subsidy Policies and Insurance Demand (2020)
Working Paper: Subsidy Policies and Insurance Demand (2016)
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DOI: 10.1257/aer.20190661

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