Insurance and Rural Welfare: What Can Panel Data Tell Us?

J.W. Gunning, C. Elbers, L. Pan

Research output: Contribution to journalArticleAcademicpeer-review

3 Citations (Scopus)

Abstract

Assessing the scope for insurance in rural communities usually requires a structural model of household behaviour under risk. One of the few empirical applications of such models is the study by Rosenzweig and Wolpin (1993) who conclude that Indian farmers in the ICRISAT villages would not benefit from the introduction of formal weather insurance. In this article we investigate how models such as theirs can be estimated from panel data on production and assets. We show that if assets can take only a limited number of values the coefficients of the model cannot be estimated with reasonable precision. We also show that this can affect the conclusion that insurance would not be welfare improving.
Original languageEnglish
Pages (from-to)3093-3101
JournalApplied Economics
Volume41
Issue number24
DOIs
Publication statusPublished - 2009

Keywords

  • accumulation
  • investments
  • countries
  • india
  • risk

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