and income compared with those that report no shock (see panels A2 and B2 in Table 13). However, households have the same average wealth and land holdings independently of having self-reported a shock or no shock. Further visual inspection suggests that these self-reported shocks are not correlated with wealth. This apparent lack of correlation between shocks seems to hold for both rural and urban households (see panels A3 and B3 in Table 13).

Table 14 shows the self-reported insurance mechanisms used to cope with shocks. We group insurance mechanisms as specific strategies to cope against these shocks into “no insurance”, “self-insurance”, and “mutual insurance”. We focus on what households declared as their main coping strategy. The items “no Insurance”, “mutual Insurance”, and “self-Insurance” do not sum to 100%; instead, they sum up to the percentage of households that reported having a shock (see Table 13). Precisely, in rural areas, 71% of households reported suffering a shock: 35% of total rural households reported using no insurance to deal with that shock, 28% reported some form of self-insurance, and 7% reported some form of mutual insurance. In urban areas, 39% of households reported suffering a shock: 22% of total urban households report using no insurance, 15% reported some form of self-insurance, and 2% reported some form of mutual insurance. That is, in rural areas, 35/71=49% of households report not using an insurance mechanism conditional on having reported a shock, while this figure is slightly higher (22/39=56%) in urban areas.

The results in previous sections imply that only those at the top of the income distribution have some ability to accumulate wealth. This suggests that only those households will be able to use their savings or accumulated wealth to smooth shocks as a form of self-insurance. Indeed, we find that households that report report self-insurance are better off in CIW than those that report no insurance or some form of mutual insurance (see panel A2 in Table 14). In particular, note from panel B2 Table 14 that urban households that report using “savings” as their main coping strategy are the only ones with a positive saving rate of 0.12.<sup>66</sup> We note that the households that resort to mutual insurance in the event of a shock are those that are the worst off in terms of CIW. This seems to suggest that those that report not having used insurance mechanisms are self-selected; that is, the households that report no insurance are possibly not in bad enough shape to resort to mutual insurance. Indeed, among the bottom of the CIW distributions, self-insurance (mainly “savings”) is less common as a coping strategy. Among the bottom 20% of the CIW distributions in rural areas, “mutual insurance” is cited by 10% of the households as the most important coping strategy (see panel A3 in Table 14).<sup>67</sup> This

> 66Udry (1995) provides evidence of the use of savings as an insurance mechanism to smooth consumption in northern Nigeria.

> 67Note that mutual insurance is exclusively family help; the percentage of households that report receiving mutual insurance from government and nongovernmental organizations is negligible in both rural and urban areas.

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