Barriers to Household Risk Management : Evidence from India

Why do many households remain exposed to large exogenous sources of nonsystematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and nonprice factors in the adoption of an innovative rainfall insurance product. Demand is significantly pric...

Full description

Bibliographic Details
Main Authors:	Cole, Shawn A., Giné, Xavier, Tobacman, Jeremy, Townsend, Robert M., Topalova, Petia, Vickery, James
Format:	Journal Article
Language:	en_US
Published:	American Economic Association 2014
Subjects:	personal finance risk uncertainty decision-making microeconomic analyses economic development agriculture saving and capital investment farm households rural transportation
Online Access:	http://hdl.handle.net/10986/17926

id	okr-10986-17926
recordtype	oai_dc
spelling	okr-10986-179262021-04-23T14:03:41Z Barriers to Household Risk Management : Evidence from India Cole, Shawn A. Giné, Xavier Tobacman, Jeremy Townsend, Robert M. Topalova, Petia Vickery, James personal finance risk uncertainty decision-making microeconomic analyses economic development agriculture saving and capital investment farm households rural transportation Why do many households remain exposed to large exogenous sources of nonsystematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and nonprice factors in the adoption of an innovative rainfall insurance product. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to US insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints, and limited salience are significant nonprice frictions that constrain demand. We suggest possible contract design improvements to mitigate these frictions. 2014-04-21T18:58:39Z 2014-04-21T18:58:39Z 2013-01 Journal Article American Economic Journal: Applied Economics 1945-7782 10.1257/app.5.1.104 http://hdl.handle.net/10986/17926 en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo American Economic Association American Economic Association Publications & Research :: Journal Article India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	personal finance risk uncertainty decision-making microeconomic analyses economic development agriculture saving and capital investment farm households rural transportation
spellingShingle	personal finance risk uncertainty decision-making microeconomic analyses economic development agriculture saving and capital investment farm households rural transportation Cole, Shawn A. Giné, Xavier Tobacman, Jeremy Townsend, Robert M. Topalova, Petia Vickery, James Barriers to Household Risk Management : Evidence from India
geographic_facet	India
description	Why do many households remain exposed to large exogenous sources of nonsystematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and nonprice factors in the adoption of an innovative rainfall insurance product. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to US insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints, and limited salience are significant nonprice frictions that constrain demand. We suggest possible contract design improvements to mitigate these frictions.
format	Journal Article
author	Cole, Shawn A. Giné, Xavier Tobacman, Jeremy Townsend, Robert M. Topalova, Petia Vickery, James
author_facet	Cole, Shawn A. Giné, Xavier Tobacman, Jeremy Townsend, Robert M. Topalova, Petia Vickery, James
author_sort	Cole, Shawn A.
title	Barriers to Household Risk Management : Evidence from India
title_short	Barriers to Household Risk Management : Evidence from India
title_full	Barriers to Household Risk Management : Evidence from India
title_fullStr	Barriers to Household Risk Management : Evidence from India
title_full_unstemmed	Barriers to Household Risk Management : Evidence from India
title_sort	barriers to household risk management : evidence from india
publisher	American Economic Association
publishDate	2014
url	http://hdl.handle.net/10986/17926
_version_	1764438712246075392

Barriers to Household Risk Management : Evidence from India

Similar Items