Chapter

Targeting and Informal Insurance

Ethan Ligon

in Insurance Against Poverty

Published in print November 2004 | ISBN: 9780199276837
Published online January 2005 | e-ISBN: 9780191601620 | DOI: http://dx.doi.org/10.1093/0199276838.003.0010

Series: WIDER Studies in Development Economics

Targeting and Informal Insurance

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This chapter provides a cardinal measure of risk consistent with the ordinal notion of risk developed by Rothschild and Stiglitz (1970). It presents a simple method for decomposing this measure of risk into risks due to aggregate shocks, observable idiosyncratic shocks, and unobservable shocks. It develops an estimator for risk-sharing regressions. The techniques are applied to analyse data from the Indian ICRISAT (International Crops Research Institute for the Semi-Arid Tropics) village studies. It is shown that Aurepalle has the best intra-village insurance, but the least access to mechanisms for smoothing aggregate consumption.

Keywords: risk; poverty; shocks; risk-sharing; insurance

Chapter.  8192 words.  Illustrated.

Subjects: Economic Development and Growth

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