Consumption insurance under uncertainty: The case of Nepal during Maoist insurgency

Mani Nepal and Alok Bohara

International Journal of Development and Conflict, 2015, vol. 5, issue 1, 1-31

Abstract: We test the implication of the full consumption insurance hypotheses in the presence of violent conflict due to the Maoist People’s War using household survey data from Nepal. We find that food consumption is more vulnerable than non-food consumption if we do not account for the non-linear relationship between the consumption and the level of violence. The level of food consumption vulnerability, however, is not severe for the households with low levels of education and income. Contrary to the common notion of vulnerability of low-caste/ethnic group, we find complete consumption insurance for this socially excluded social group. This result is surprising as the socially disadvantaged caste/ethnic group has been considered more vulnerable in Nepal.

Keywords: Consumption Insurance; Nepal; Violent Conflict; Consumption Vulnerability (search for similar items in EconPapers)
JEL-codes: D1 O17 R2 (search for similar items in EconPapers)
Date: 2015
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