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Understanding Pastoralists’ Dynamic Insurance Uptake Decisions: Evidence from Four-year Panel Data in Ethiopia

Kazushi Takahashi, Yuma Noritomo, Munenobu Ikegami and Nathaniel Jensen
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Yuma Noritomo: Graduate School of Economics, The University of Tokyo

No 19-22, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: Using a unique data set covering four years and six semi-annual sales periods of an index-based livestock insurance (IBLI) product in southern Ethiopia, we examine the dynamics of pastoralists’ demand for IBLI. We find that: (1) there is intertemporal dependence of an uptake decision, represented by correlations of unobserved household factors over time; (2) conditional on previous purchase decisions, factors related to continuing the purchase of IBLI to augment existing coverage and replace lapsing contracts differ significantly; (3) controlling for time-invariant household-fixed effects, neither a one-shot subsidy nor the uptake of others in one’s social network influence subsequent demand, whereas less vegetation and reduced insurance premiums induce households to purchase IBLI. Overall, our study provides rigorous micro-evidence to better understand the dynamic uptake of IBLI and signifies the importance of an empirical analysis that takes into account the dynamic demand structure.

Pages: 43 pages
Date: 2019-10
New Economics Papers: this item is included in nep-dev and nep-ias
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Journal Article: Understanding pastoralists’ dynamic insurance uptake decisions: Evidence from four-year panel data in Ethiopia (2020) Downloads
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