The dual role of insurance in input use: Mitigating risk versus curtailing incentives

• 成果类型: Article
• 署名作者: Pietrobon, Davide
• 署名单位: Lund University
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2023.103203
• 发表日期: 2024
• 关键词: insurance; RISK; private information; Effort; agriculture; fertilizer; COMPLEMENTARITY

摘要

Insurance can encourage the use of risk-increasing inputs, but it can also decrease people's incentives to exert effort when the latter is difficult to monitor. This effort reduction can be associated with a decrease in the use of effort-complementary inputs. I study a model of risk-sharing that allows for both effects of insurance on input use and use the latest ICRISAT panel to structurally estimate it. Median fertilizer use is almost three times higher under no sharing than under full insurance for reasonable levels of risk aversion. A subsidy that halves fertilizer prices increases farmers' welfare by 37% in consumption-equivalent terms.