Language:
English
Pages:
Online-Ressource (40 p)
Edition:
2010 World Bank eLibrary
Parallel Title:
Cole, Shawn Barriers to household risk management
Abstract:
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
DOI:
10.1596/1813-9450-5504
URL:
Volltext
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