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สถาบันวิจัยเศรษฐกิจป๋วย อึ๊งภากรณ์
Puey Ungphakorn
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ประกาศรับสมัครทุนสถาบันวิจัยเศรษฐกิจป๋วย อึ๊งภากรณ์ ประจำปี 2566 รอบที่ 2
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20 April 2016
20161461110400000
No. 024

Welfare Impacts of Index Insurance in the Presence of a Poverty Trap

Abstract

This paper evaluates the welfare impacts of an index-based livestock insurance designed to compensate for satellite-based predicted livestock mortality in northern Kenya, where previous work has established the presence of poverty traps. We simulate household wealth dynamics based on rich panel and experimental data. The bifurcated livestock dynamics associated with the poverty trap gives rise to insurance valuation that is highly nonlinear in herd size. Estimated willingness to pay among vulnerable groups who most need insurance is, on average, lower than commercially viable rates. Targeted premium subsidization nonetheless appears to offer more cost-effective poverty reduction than need-based direct transfers.

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JEL: D14D81D91I32O12
Tags: index insuranceasset risknonlinear growthpoverty trapssafety netrisk preference elicitationafricakenya
The views expressed in this workshop do not necessarily reflect the views of the Puey Ungphakorn Institute for Economic Research or the Bank of Thailand.
Sommarat Chantarat
Sommarat Chantarat
Puey Ungphakorn Institute for Economic Research
Andrew G. Mude
Andrew G. Mude
Christopher B. Barrett
Christopher B. Barrett
Calum G. Turvey
Calum G. Turvey

Puey Ungphakorn Institute for Economic Research

273 Samsen Rd, Phra Nakhon, Bangkok 10200

Phone: 0-2283-6066

Email: pier@bot.or.th

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