著者

NORITOMO Yuma TAKAHASHI Kazushi

出版者

GRIPS Policy Research Center

雑誌

GRIPS Discussion Papers

巻号頁・発行日

vol.19-07, 2019-06

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Index-based insurance can have welfare-enhancing effects through two pathways: by mitigating weather-related shocks through payouts and by inducing policyholders to take greater yet more profitable risks. Most studies fail to distinguish between these two. Thus, we know little about which effects dominate and their long-term welfare implications. Using a random distribution of discount coupons and drought events that trigger payouts as exogenous variations, this study aims to identify both the ex ante risk-management and ex post payout effects of index insurance in a pastoral-dominant society of northern Kenya, where the presence of asset-based poverty traps, represented by bifurcated herd-size dynamics, has been established in the literature. We find the following: (1) Both risk-management and payout effects contribute to reducing the probability of distress sales of livestock; (2) payout effects also lead to a reduced slaughter of livestock; (3) while payout effects remain robust in a subsample of poorer households below the poverty trap threshold, risk-management effects do not. Overall, our results suggest that insurance payouts assist people in escaping from poverty traps more effectively than do behavioural changes accompanied by insurance purchases.

著者

TAKAHASHI Kazushi NORITOMO Yuma IKEGAMI Munenobu JENSEN Nathaniel D.

出版者

GRIPS Policy Research Center

雑誌

GRIPS Discussion Papers

巻号頁・発行日

vol.19-22, 2019-10

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Using a unique data set covering four years and six semi-annual sales periods of an index-based livestock insurance (IBLI) product in southern Ethiopia, we examine the dynamics of pastoralists’ demand for IBLI. We find that: (1) there is intertemporal dependence of an uptake decision, represented by correlations of unobserved household factors over time; (2) conditional on previous purchase decisions, factors related to continuing the purchase of IBLI to augment existing coverage and replace lapsing contracts differ significantly; (3) controlling for time-invariant household-fixed effects, neither a one-shot subsidy nor the uptake of others in one’s social network influence subsequent demand, whereas less vegetation and reduced insurance premiums induce households to purchase IBLI. Overall, our study provides rigorous micro-evidence to better understand the dynamic uptake of IBLI and signifies the importance of an empirical analysis that takes into account the dynamic demand structure.