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Distinguishing Barriers to Insurance in Thai Villages

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  • Cynthia Kinnan

Abstract

Informal insurance is an important risk-coping mechanism in developing countries, yet this risk sharing is incomplete. Models of limited commitment, moral hazard, and hidden income have been proposed to explain incomplete informal insurance. This work shows that the way history matters in forecasting consumption can be used to distinguish hidden income from limited commitment and moral hazard. The paper also develops a nonparametric test that is robust to nonclassical measurement error and individual–level heterogeneity. In panel data from rural Thailand, limited commitment and moral hazard are rejected. The predictions of the hidden income model are supported by the data.

Suggested Citation

  • Cynthia Kinnan, 2022. "Distinguishing Barriers to Insurance in Thai Villages," Journal of Human Resources, University of Wisconsin Press, vol. 57(1), pages 44-78.
    • Handle: RePEc:uwp:jhriss:v:57:y:2022:i:1:p:44-78
    Note: DOI: 10.3368/jhr.57.1.0219-10067R1
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    File URL: http://jhr.uwpress.org/cgi/reprint/57/1/44
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    Citations

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    Cited by:

    1. Chaoran Chen & Diego Restuccia & Raul Santaeulalia-Llopis, 2022. "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 41-54, July.
    2. Karlan, Dean & Morduch, Jonathan, 2010. "Access to Finance," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4703-4784, Elsevier.
    3. Joachim De Weerdt & Garance Genicot & Alice Mesnard, 2019. "Asymmetry of Information within Family Networks," Journal of Human Resources, University of Wisconsin Press, vol. 54(1), pages 225-254.
    4. Patacchini, Eleonora & Barrett, Christopher & , & Walker, Thomas, 2019. "Altruism, Insurance, And Costly Solidarity Commitments1," CEPR Discussion Papers 14148, C.E.P.R. Discussion Papers.
    5. Renate Strobl & Conny Wunsch, 2021. "Risky choices and solidarity: disentangling different behavioural channels," Experimental Economics, Springer;Economic Science Association, vol. 24(4), pages 1185-1214, December.
    6. Costas Meghir & Ahmed Mushfiq Mobarak & Ahmed Corina Mommaerts & Ahmed Melanie Morten, 2019. "Migration and Informal Insurance," Cowles Foundation Discussion Papers 2185R, Cowles Foundation for Research in Economics, Yale University, revised Aug 2020.
    7. Parantap Basu & Sigit Sulistiyo Wibowo, 2015. "An Empirical Investigation of Risk Sharing among Indonesian Households," CEGAP Working Papers 2015_02, Durham University Business School.
    8. Li, Zhimin & Ligon, Ethan, 2020. "Inferring informal risk-sharing regimes: Evidence from rural Tanzania," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 941-955.
    9. Fujimoto, Junichi & Lee, Junsang, 2020. "Optimal self-financing microfinance contracts when borrowers have risk aversion and limited commitment," Journal of Mathematical Economics, Elsevier, vol. 91(C), pages 60-79.
    10. Putman, Daniel S., 2020. "The Scope of Risk Pooling," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304480, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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