Risk and the Extent of Insurance

This paper proposes measures of income risk that households face, and of the extent of insurance effectively delivered by the various coping mechanisms those households use to minimize the consequence of that risk by (1) contrasting the expected utility of consumption an individual has with the util...

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Bibliographic Details
Main Authors:	Genicot, Garance, Ligon, Ethan
Format:	Working Paper
Language:	en_US
Published:	World Bank, Washington, DC 2013
Subjects:	insurance risk risk reduction risk coping risk avoidance diversification savings borrowing transfers
Online Access:	http://hdl.handle.net/10986/16332

id	okr-10986-16332
recordtype	oai_dc
spelling	okr-10986-163322021-04-23T14:03:28Z Risk and the Extent of Insurance Genicot, Garance Ligon, Ethan insurance risk risk reduction risk coping risk avoidance diversification savings borrowing transfers This paper proposes measures of income risk that households face, and of the extent of insurance effectively delivered by the various coping mechanisms those households use to minimize the consequence of that risk by (1) contrasting the expected utility of consumption an individual has with the utility that she would have from consuming her income in each period, adjusted to account for the price of these coping mechanisms; (2) detailing the steps necessary to apply these measures to panel data of household income and consumption; and (3) measuring income risk, consumption risk, and insurance using the Indonesia Family Life Survey (IFLS). Expected consumption represents on average 65 percent of the expected income for the IFLS households, suggesting households remain willing to forgo a non-negligible amount of consumption in order to smooth it. Comparing risk and insurance across households highlights geography and education as key determinants of the cost of risk for households. 2013-12-02T19:28:57Z 2013-12-02T19:28:57Z 2013-11-12 http://hdl.handle.net/10986/16332 en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	insurance risk risk reduction risk coping risk avoidance diversification savings borrowing transfers
spellingShingle	insurance risk risk reduction risk coping risk avoidance diversification savings borrowing transfers Genicot, Garance Ligon, Ethan Risk and the Extent of Insurance
description	This paper proposes measures of income risk that households face, and of the extent of insurance effectively delivered by the various coping mechanisms those households use to minimize the consequence of that risk by (1) contrasting the expected utility of consumption an individual has with the utility that she would have from consuming her income in each period, adjusted to account for the price of these coping mechanisms; (2) detailing the steps necessary to apply these measures to panel data of household income and consumption; and (3) measuring income risk, consumption risk, and insurance using the Indonesia Family Life Survey (IFLS). Expected consumption represents on average 65 percent of the expected income for the IFLS households, suggesting households remain willing to forgo a non-negligible amount of consumption in order to smooth it. Comparing risk and insurance across households highlights geography and education as key determinants of the cost of risk for households.
format	Publications & Research :: Working Paper
author	Genicot, Garance Ligon, Ethan
author_facet	Genicot, Garance Ligon, Ethan
author_sort	Genicot, Garance
title	Risk and the Extent of Insurance
title_short	Risk and the Extent of Insurance
title_full	Risk and the Extent of Insurance
title_fullStr	Risk and the Extent of Insurance
title_full_unstemmed	Risk and the Extent of Insurance
title_sort	risk and the extent of insurance
publisher	World Bank, Washington, DC
publishDate	2013
url	http://hdl.handle.net/10986/16332
_version_	1764432864899760128

Risk and the Extent of Insurance

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