Dynamics of Demand for Index Insurance: Evidence from a Long-Run Field Experiment

Cole, Shawn; Stein, Daniel; Tobacman, Jeremy

doi:10.1257/aer.104.5.284

Cited by 105 publications

(72 citation statements)

References 6 publications

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“…The marketing experiments are described in Appendix B1. The effects of some of these manipulations on insurance demand have been analysed separately (Cole et al 2013b;Cole, Stein and Tobacman 2014). All years included a price reduction among the manipulations, either in the form of a fixed discount or a price offered in the context of an incentive-compatible willingnessto-pay elicitation (a Becker-DeGroot-Marschak, or BDM, mechanism).…”

Section: Experimental Designmentioning

confidence: 99%

“…This section elaborates. Table A7 and the description that follows were adapted from the discussion of marketing variables and instruments found in the online appendix of Cole, Stein and Tobacman (2014). There are some differences in the instruments due to the different sample being used, and a correction of some minor errors in the earlier paper.…”

Section: Appendix B B1: Description Of Marketing Interventionsmentioning

confidence: 99%

“…To the contrary, Giné and Yang (2009) documented that bundling loans with weather-linked insurance contracts reduced demand for credit, while Stein and Tobacman (2015) found especially low demand for weather insurance bundled with savings. The dynamics of insurance demand appear powerful, in the sense that people are more likely to purchase when they and their neighbours have received recent payouts (Cole, Stein and Tobacman 2014;Stein 2014). Recent work has examined the importance of social networks on insurance adoption (Cai, De Janvry and Sadoulet 2015), finding substantial peer effects.…”

Section: Introductionmentioning

confidence: 99%

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Insuring farmers against weather shocks: evidence from India

Tobacman¹,

Stein²,

Shah³

et al. 2017

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The International Initiative for Impact Evaluation (3ie) is an international grant-making NGO promoting evidence-informed development policies and programmes. We are the global leader in funding, producing and synthesising high-quality evidence of what works, for whom, how, why and at what cost. We believe that better and policy-relevant evidence will help make development more effective and improve people's lives. 3ie impact evaluations3ie-supported impact evaluations assess the difference a development intervention has made to social and economic outcomes. 3ie is committed to funding rigorous evaluations that include a theory-based design, use the most appropriate mix of methods to capture outcomes and are useful in complex development contexts. About this report3ie accepted the final version of this report, Insuring farmers against weather shocks: evidence from India, as partial fulfilment of the requirements of grant OW3.1171 awarded under Open Window 3. The report has been formatted to 3ie standards. However, despite best efforts in working with the authors, some references are still missing and figures and tables could not be improved. We have copy-edited the content to the extent possible. These efforts caused a delay in publishing this report, which is why the series number and date are out of sequence.All of the content is the sole responsibility of the authors and does not represent the opinions of 3ie, its donors or its board of commissioners. Any errors and omissions are the sole responsibility of the authors. Please direct any comments or queries to the corresponding author, Jeremy Tobacman, at tobacman@wharton.upenn.edu Funding for this impact evaluation was provided by 3ie's donors, which include UK Aid, the Bill & Melinda Gates Foundation and the Hewlett Foundation. A complete listing of all of 3ie's donors is available on the 3ie website. SummaryWith weather risk a key source of income vulnerability for many of the 2.5 billion people around the world who derive their income from smallholder agriculture, rainfall insurance represents a potentially important product innovation.This study performs a rigorous evaluation of the long-term impacts of rainfall insurance access and coverage on agricultural investment and outcomes, consumption and wellbeing proxies using a randomised controlled trial design. Main findingsWe find no systematic, long-term effect of insurance access or adoption on agricultural investment decisions. There is also little to no statistical difference in reported agricultural revenues and profits. This is true even though (randomly assigned) subsidies caused households that purchased insurance policies to experience greater financial income from insurance payouts than financial costs from insurance premiums. These findings suggest that the insurance products studied were not sufficient to induce farmers to adopt theoretically promising alternative investments, such as high-yielding variety crops.Demand for rainfall insurance among study households was moderate. Depending on the...

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Section: Experimental Designmentioning

confidence: 99%

Section: Appendix B B1: Description Of Marketing Interventionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Insuring farmers against weather shocks: evidence from India

Tobacman¹,

Stein²,

Shah³

et al. 2017

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“…confirmation bias). Otrzymane świad-czenie utwierdza takie osoby w przekonaniu o tym, że podjęta decyzja co do zawarcia ubezpieczenia była słuszna i skłania do ponownego zakupu 37 . Bardzo istotny wpływ otrzymanych świadczeń na zakup ubezpieczenia indeksowego w kolejnych okresach potwierdziło także kolejne badanie rzeczywistego popytu na ubezpieczenia indeksowe w Indiach.…”

Section: Otrzymane Wcześniej Odszkodowania I śWiadczeniaunclassified

Determinanty popytu na ubezpieczenia indeksowe w rolnictwie w świetle badań

Kaczała

2017

10.14746/rpeis

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W przypadku gospodarstwa rolnego występuje wysoka różnorodność zagrożeń mających w dużej mierze egzogeniczny charakter i cechujących się ograniczoną możliwością kontroli. Z tego względu dostęp do instrumentów pozwalających na finansowanie skutków materializacji tych zagrożeń ma znaczenie kluczowe, niezależnie od postawionego przez gospodarstwo celu (przetrwanie lub rozwój). Jednym z instrumentów kontroli finansowej są ubezpieczenia, w tym ubezpieczenia upraw.Ubezpieczenia upraw, niezależnie od rynku, na którym są oferowane, oparte były od początku na zasadzie odszkodowawczej, która stanowiła, że wypłaca-ne odszkodowanie pokrywało zaistniałą z umówionych przyczyn szkodę (przy czym, tak jak w innych rodzajach ubezpieczeń, dopuszczalne były różne formy ograniczania odpowiedzialności ubezpieczyciela). Ze względu jednak na wysoki poziom kumulacji ryzyka, problemy z dostępnością i wysoką cenę reasekuracji, poziom asymetrii informacji, skutkujący podwyższonym hazardem moralnym i motywacyjnym, a także kosztowną i wymagającą specjalistycznej wiedzy likwidację szkód, której towarzyszą liczne spory -koszty funkcjonowania tradycyjnych ubezpieczeń upraw były bardzo wysokie 1 . To zrodziło potrzebę poszukiwania innego sposobu konstrukcji umowy ubezpieczenia, któ-ra byłaby w mniejszym stopniu podatna na wymienione wcześniej problemy. W efekcie zastosowano do ubezpieczeń upraw indeks, który był już wykorzystywany w innych branżach (przede wszystkim energetycznej).Programy ubezpieczeniowe wykorzystujące ubezpieczenia indeksowe wprowadzono początkowo w Stanach Zjednoczonych i Kanadzie, a indeks dotyczył średniej wielkości plonów lub średniej wielkości dochodu z 1 ha upraw. Nieco później, gdyż pod koniec ubiegłego wieku, do produktów będących mikroubezpieczeniami i skierowanych do krajów rozwijających się zaczęto stosować także inne indeksy, tzw. pogodowe, które dotyczyły przede wszystkim wysokości opadów. W ciągu ostatnich 15 lat zainicjowano kilkadziesiąt programów pilo-1 W przypadku ubezpieczenia upraw typu multi-risk bądź o charakterze all risk gwarantowanych przez państwo uproszczony wskaźnik szkodowości kształtował się w różnych okresach lat 1970-1980 w USA, Indiach, Brazylii, Kostaryce, Japonii, Meksyku i na Filipinach w granicach od 2,6 do 5,74. J. Skees et al., New approaches to crop yield insurance in developing countries, EPTD

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“…CV study can be conducted through different experimental designs, such as dynamic field experiment (Cole, Stein, & Tobacman, 2014), iterative bidding game (Asgary et al, 2004) and payment card format (Barnighausen, Liu, Zhang, & Sauerborn, 2007). Among these methods, the double-bounded dichotomous choices (DBDC) is the most commonly used.…”

Section: Introductionmentioning

confidence: 99%

Evaluating Farm-Level Crop Insurance Demand in China: A Double-Bounded Dichotomous Approach

Zhang

Fan²

2016

JAS

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In 2007 the Chinese Ministry of Finance (CMF) approved the pilot agricultural insurance subsidy program, which tremendously promoted the growth of the agricultural insurance market. However the insurance adoption rate is still low comparing to that of developed countries. The main objective of this paper is to investigate factors most influence growers' crop insurance adoption decisions. To this end, we adopt a double-bounded dichotomous choice (DBDC) experiment. This bidding experiment is conducted through extensive in-person interviews with over 300 rural households in west China, Szechwan province. By using the maximize likelihood method we empirically estimate the effects of factors such as landholding, income and farming experience on the farm-level crop insurance demand. Results indicate that the majority (53 per cent) of rice growers are willing to pay a high crop insurance premium above ¥10 ($ 1.7). On the other side, about 23 per cent of growers value the crop insurance below ¥2 ($ 0.34). As expected, the effects of landholding, education and income are all positive and statistically significant. However, household size and farming experience adversely affect the insurance adoption decisions.

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Dynamics of Demand for Index Insurance: Evidence from a Long-Run Field Experiment

Cited by 105 publications

References 6 publications

Insuring farmers against weather shocks: evidence from India

Insuring farmers against weather shocks: evidence from India

Determinanty popytu na ubezpieczenia indeksowe w rolnictwie w świetle badań

Evaluating Farm-Level Crop Insurance Demand in China: A Double-Bounded Dichotomous Approach

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