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Do Index Insurance Programs Live Up to Their Promises ? Aggregating Evidence from Multiple Experiments

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  • Castaing,Pauline
  • Gazeaud,Jules

Abstract

Despite limited uptake, index insurance is often seen as one of the most remarkableinnovations of the past decades to help smallholder farmers manage risks. This paper uses a Bayesian hierarchical modelto aggregate evidence from existing experiments and assess the external validity of their results. The findings showpositive but highly heterogeneous responses to index insurance across experiments. Interventions expanding accessto index insurance typically boost productive investments by 0.06–0.11 standard deviation on average. However, treatmenteffects display substantial heterogeneity and there is no evidence that this heterogeneity can be meaningfullyexplained by basic household characteristics. The existing evidence base thus offers limited insights to predict theimpact of index insurance in new settings. The paper concludes that governments and development agencies shouldremain cautious before investing in the widespread expansion of index insurance.

Suggested Citation

  • Castaing,Pauline & Gazeaud,Jules, 2022. "Do Index Insurance Programs Live Up to Their Promises ? Aggregating Evidence from Multiple Experiments," Policy Research Working Paper Series 10161, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10161
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    References listed on IDEAS

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    1. Dean Karlan & Robert Osei & Isaac Osei-Akoto & Christopher Udry, 2014. "Agricultural Decisions after Relaxing Credit and Risk Constraints," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 597-652.
    2. Ahmed Mushfiq Mobarak & Mark R. Rosenzweig, 2013. "Informal Risk Sharing, Index Insurance, and Risk Taking in Developing Countries," American Economic Review, American Economic Association, vol. 103(3), pages 375-380, May.
    3. Oriana Bandiera & Greg Fischer & Andrea Prat & Erina Ytsma, 2021. "Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 435-454, December.
    4. Rachael Meager, 2019. "Understanding the Average Impact of Microcredit Expansions: A Bayesian Hierarchical Analysis of Seven Randomized Experiments," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 57-91, January.
    5. Shawn Cole & Xavier Giné & James Vickery, 2017. "How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1935-1970.
    6. Hill, Ruth Vargas & Kumar, Neha & Magnan, Nicholas & Makhija, Simrin & de Nicola, Francesca & Spielman, David J. & Ward, Patrick S., 2019. "Ex ante and ex post effects of hybrid index insurance in Bangladesh," Journal of Development Economics, Elsevier, vol. 136(C), pages 1-17.
    7. Meager, Rachael, 2019. "Understanding the average impact of microcredit expansions: a Bayesian hierarchical analysis of seven randomized experiments," LSE Research Online Documents on Economics 88190, London School of Economics and Political Science, LSE Library.
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