Barriers to Household Risk Management: Evidence from India

• 成果类型: Article
• 署名作者: Cole, Shawn; Gine, Xavier; Tobacman, Jeremy; Topalova, Petia; Townsend, Robert; Vickery, James
• 署名单位: Harvard University; The World Bank; University of Pennsylvania; International Monetary Fund; Massachusetts Institute of Technology (MIT); Federal Reserve System - USA; Federal Reserve Bank - New York
• 刊物名称: AMERICAN ECONOMIC JOURNAL-APPLIED ECONOMICS
• ISSN/ISSBN: 1945-7782
• DOI: 10.1257/app.5.1.104
• 发表日期: 2013
• 页码: 104-135
• 关键词: insurance; income; demand; credit; INFORMATION; shocks

摘要

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.