Barriers to Household Risk Management: Evidence from India

Shawn Cole, Xavier Gine, Jeremy Tobacman, Petia Topalova, Robert Townsend and James Vickery ()

American Economic Journal: Applied Economics, 2013, vol. 5, issue 1, 104-35

Abstract: Why do many households remain exposed to large exogenous sources of nonsystematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and nonprice factors in the adoption of an innovative rainfall insurance product. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to US insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints, and limited salience are significant nonprice frictions that constrain demand. We suggest possible contract design improvements to mitigate these frictions. (JEL D14, D81, O12, O13, O16, O18, Q12)

JEL-codes: D14 D81 O12 O13 O16 O18 Q12 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/app.5.1.104
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (342)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/app.5.1.104 (application/pdf)
http://www.aeaweb.org/aej/app/data/2011-0326_data.zip (application/zip)
http://www.aeaweb.org/aej/app/app/2011-0326_app.pdf (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Barriers to Household Risk Management: Evidence from India (2012)
Working Paper: Barriers to Household Risk Management: Evidence from India (2011)
Working Paper: Barriers to household risk management: evidence from India (2010)
Working Paper: Barriers to household risk management: evidence from India (2009)
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:aea:aejapp:v:5:y:2013:i:1:p:104-35

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Applied Economics is currently edited by Alexandre Mas

More articles in American Economic Journal: Applied Economics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().