Heterogeneity and risk sharking in village economies
Pierre Chiappori,
Krislert Samphantharak,
Sam Schulhofer-Wohl and
Robert Townsend
No 483, Staff Report from Federal Reserve Bank of Minneapolis
Abstract:
We show how to use panel data on household consumption to directly estimate households? risk preferences. Specifically, we measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model, which we then test allowing for this heterogeneity. There is substantial, statistically significant heterogeneity in estimated risk preferences. Full insurance cannot be rejected. As the risk sharing, as-if-complete-markets theory might predict, estimated risk preferences are unrelated to wealth or other characteristics. 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 by several percent of household consumption.
Keywords: Thailand (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-agr and nep-sea
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http://www.minneapolisfed.org/research/sr/sr483.pdf
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=5120 (application/pdf)
Related works:
Journal Article: Heterogeneity and risk sharing in village economies (2014) 
Working Paper: Heterogeneity and risk sharing in village economies (2011) 
Working Paper: Heterogeneity and Risk Sharing in Village Economies (2011) 
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:483
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