Risk sharing and the demand for insurance: Theory and experimental evidence from Ethiopia

Berg, Erlend; Blake, Michael; Morsink, Karlijn

doi:10.1016/j.jebo.2021.12.035

Cited by 13 publications

(9 citation statements)

References 50 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In addition, even in established flood insurance systems such as the National Flood Insurance Programme (NFIP; USA), the role of continuous awareness-raising for risk is seen as crucial to keep people engaged in actively subscribing to the program over time [85]. It could be worth exploring how a potential formal insurance product would act as a replacement or complementary mechanism to existing informal practices of risk sharing [86,87]. The role of mobile payment technology in informal risk sharing [88] could be of importance in this context as well.…”

Section: Discussionmentioning

confidence: 99%

Recovering from Financial Implications of Flood Impacts—The Role of Risk Transfer in the West African Context

Wagner

Thiam²,

Dossoumou

et al. 2022

Sustainability

View full text Add to dashboard Cite

In many West African river basins, households regularly experience floods and the associated impacts. In the absence of widely accessible formal risk transfer mechanisms (e.g., insurance), households often have to cope with financial impacts. Only a few studies have explored the financial effects of floods on agriculture-dependent households in the region and the role formal and informal risk transfer plays in their mitigation. This study addresses this gap, explores flood impacts with financial implications for households, and researches the existing strategies to mitigate them. Moreover, it aims to better understand how different measures influence the recovery process. The study draws on primary data from a household survey (n = 744) in the Lower Mono River basin, combined with stakeholder workshops and semi-structured interviews, and applies a generalized linear model to the survey data. The results reveal four flood impact types with financial implications: agricultural, material, health, and trade. Moreover, a shortened recovery time is significantly associated with assistance from savings groups and cooperatives—groups originally not formed to help during floods. In light of the severe and frequent flood impacts, effective and publicly accepted adaptation measures are needed to enable favorable conditions for creating sustainable and accessible risk transfer mechanisms.

show abstract

Section: Discussionmentioning

confidence: 99%

Recovering from Financial Implications of Flood Impacts—The Role of Risk Transfer in the West African Context

Wagner

Thiam²,

Dossoumou

et al. 2022

Sustainability

View full text Add to dashboard Cite

show abstract

“…WII covers covariate risks, whereas social capital covers idiosyncratic risks, including basis risk. Dercon et al (2014) and Berg et al (2017) show that the presence of an idiosyncratic basis risk in index insurance makes the two insurance mechanisms complement each other. However, they look at the opposite perspective in that whether informal insurance arrangements increase index insurance uptake.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

The effect of weather index insurance on social capital: Evidence from rural Ethiopia

Nigus,

Nillesen,

Mohnen

2023

J of Risk & Insurance

View full text Add to dashboard Cite

We study the effect of weather index insurance (WII) uptake on social capital. We measure individual social capital using experimental and survey‐based measures and relate it to the actual purchase of WII. We use propensity score matching (PSM) and an instrumental variable (IV) to address endogeneity concerns. Our descriptive and PSM estimates show that WII uptake negatively and significantly affects social capital. We find that insured households contribute less to the public good than uninsured households. We also find qualitatively and quantitatively similar results using our IV approach, yet insufficient power renders most of our IV estimates insignificant. We however report robust significant effects of instrumented WII uptake on sociopsychological outcomes—WII uptake increases perceptions of self‐sufficiency and free‐riding behavior: these are potential channels through which a negative effect on social capital comes about. Although far from conclusive, our paper provides several pieces of evidence that suggest WII uptake negatively affects social capital.

show abstract

“…Index insurance carries basis risk, i.e., the risk an agent suffers the shock but does not receive transfers. 5 These studies find empirical evidence that the demand for index insurance rises with increased informal insurance, see Mobarak and Rosenzweig (2012), Mobarak and Rosenzweig (2013), Dercon et al (2014), Berg, Blake, and Morsink (2020). These studies also develop models where individuals informally share risk in a group, and the complementarity between index insurance and informal risk-sharing arises because informal insurance helps cover the basis risk.…”

Section: Introductionmentioning

confidence: 99%

Formal Insurance and Altruism Networks

2022

View full text Add to dashboard Cite

Risk sharing and the demand for insurance: Theory and experimental evidence from Ethiopia

Cited by 13 publications

References 50 publications

Recovering from Financial Implications of Flood Impacts—The Role of Risk Transfer in the West African Context

Recovering from Financial Implications of Flood Impacts—The Role of Risk Transfer in the West African Context

The effect of weather index insurance on social capital: Evidence from rural Ethiopia

Formal Insurance and Altruism Networks

Contact Info

Product

Resources

About