Risk-sharing networks and insurance against illness

Stefan Dercon and Joachim De Weerdt

No 2002-16, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Most risk-sharing tests on developing country data are conducted at the level of the village; generally, the full risk-sharing hypothesis is rejected. This paper uses detailed data on all insurance networks within a village in Tanzania; networks are not clustered but largely overlapping. We test whether full risk-sharing occurs within these networks. We find that even within these smaller networks risk is not fully shared. In the event of a health shock, households reduce overall consumption: they cut back non-food consumption by roughly 30%, while protecting their food consumption.

Date: 2002
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Related works:
Journal Article: Risk-sharing networks and insurance against illness (2006)
Working Paper: RISK-SHARING NETWORKS AND INSURANCE AGAINST ILLNESS (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2002-16

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