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The impact of social capital on consumption insurance and income volatility in U.K.: evidence from british household panel survey

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  • Pericoli, Filippo M.
  • Pierucci, Eleonora
  • Ventura, Luigi

Abstract

On BHPS data we measure various indices of social capital at the individual and household level, and use them as explanatory variables in standard consumption insurance tests. We find that two out of three aspects of social capital positively impact on consumption smoothing, by reducing the sensitivity of idiosyncratic consumption to idiosyncratic income, both in the long and in the short run. Such effects, however, turn out to be more pronounced in the long run. Further confirmation of the positive impact of social capital on insurance opportunities are derived from an income smoothing exercise, as well as from a Poisson and a Logit analysis on the occurrence of unemployment spells.

Suggested Citation

  • Pericoli, Filippo M. & Pierucci, Eleonora & Ventura, Luigi, 2012. "The impact of social capital on consumption insurance and income volatility in U.K.: evidence from british household panel survey," MPRA Paper 44214, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:44214
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    Cited by:

    1. Faruk Balli & Filippo Maria Pericoli & Eleonora Pierucci, 2016. "Channels of Risk Sharing at Micro Level: Savings, Investments and Risk Aversion Heterogeneity," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 90-104, January.
    2. Chen, Bo & Zeng, Ning & Tam, Kwo Ping, 2024. "Do social networks affect household financial vulnerability? Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    3. Evren Ceritoğlu, 2018. "Self-insurance and consumption risk-sharing between birth-year cohorts in Turkey," Review of Economics of the Household, Springer, vol. 16(4), pages 1085-1118, December.
    4. Yakubu Abdul-Salam & Euan Phimister, 2017. "Efficiency Effects of Access to Information on Small-scale Agriculture: Empirical Evidence from Uganda using Stochastic Frontier and IRT Models," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(2), pages 494-517, June.
    5. Shi, Xiaojun & Du, Baorui, 2024. "Decomposition of social networks and household purchase of insurance as knowledge products," Research in International Business and Finance, Elsevier, vol. 69(C).
    6. Balli Faruk & Pierucci Eleonora, 2020. "Risk Sharing and Institutional Quality: Evidence from OECD and Emerging Economies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(1), pages 53-71, February.

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    More about this item

    Keywords

    consumption insurance; social capital; income volatility; item response theory;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics

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