Barriers to household risk management
Subtitle: evidence from India
By: Shawn Cole, Xavier Giné, Jeremy Tobacman, Petia Topalova, Robert Townsend, James Vickery
Contributors: Gine, Xavier; Harvard Business School
Edition: Rev.
Series: Working paper / Harvard Business School -- 09-116; Working paper (Harvard Business School) -- 09-116.
Publisher: Harvard Business School
Published: 2008
Place of publication: [Boston]
Language: eng
Number of pages: 29
Description: Why do many households remain exposed to large exogenous sources of non-systematic income risk? Why don't financial markets develop to pool these risks? This paper uses a series of randomized field experiments to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product, designed to hedge a major source of agricultural production risk. Demand is shown to be significantly price-sensitive, with a price elasticity between -0.66 and -0.88. However, non-price frictions, such as liquidity constraints and limited trust in the insurance provider, are also found to be important in explaining limited insurance take-up. Keywords: Insurance, Consumer Finance, Liquidity Constraints, Trust, Economic Development.
Notes: "April 2009, revised November 2010"--Publisher's website.

"First version: August 2008, this version: November 2010"--added t.p.

Includes bibliographical references.