STICERD Work in Progress Seminars
Access to information and weather insurance take-up: an empirical investigation
Laura Munro (Department of International Development, LSE)
Friday 27 June 2014 13:00 - 14:00
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About this event
The welfare of low-income agrarian households is severely constrained by risk. Weather index insurance was developed to help poor farmers address one of these risks: low crop yields from flood or drought. Yet, insurance take-up remains low. Drawing on a framed field experiment with smallholder farmers in Gujarat, India, this study provides insights into the explanatory role of one potentially powerful determinant of insurance take-up: access to information about peer purchasing decisions in the network. Three channels through which this information may influence decisions to purchase insurance are examined: (i) ex-ante informal risk sharing, (ii) ex-post informal risk sharing and (iii) herding. Experimental findings suggest that information about peer purchasing decisions constrains weather insurance take-up through ex-post informal transfers. There is also some evidence that herding behavior constrains take-up when peers have low willingness to pay. These findings highlight the heterogeneous effects of information sharing for farmer welfare.