Barriers to household risk management: evidence from India
Xavier Gine (),
Robert Townsend and
James Vickery ()
No 5504, Policy Research Working Paper Series from The World Bank
Why do many households remain exposed to large exogenous sources of non-systematic income risk? This paper uses a series of randomized field experiments in rural India to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product. The analysis finds that demand is significantly price-elastic, but that even if insurance were offered with payout ratios similar to US, widespread coverage would not be achieved. The paper identifies key non-price frictions that limit demand: liquidity constraints, particularly among poor households, lack of trust, and limited salience. The authors suggest potential improvements in contract design to mitigate these frictions.
Keywords: Financial Literacy; Debt Markets; Access to Finance; Emerging Markets; Labor Policies (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-exp and nep-mfd
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Journal Article: Barriers to Household Risk Management: Evidence from India (2013)
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 (2009)
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