Insuring Well-Being? : Buyer's Remorse and Peace of Mind Effects from Insurance
This paper estimates the causal effects of index insurance coverage on subjective well-being among livestock herders in southern Ethiopia. The randomization of incentives to purchase index-based livestock insurance and three rounds of panel data ar...
| Main Authors: | , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/747921511792941207/Insuring-well-being-buyers-remorse-and-peace-of-mind-effects-from-insurance http://hdl.handle.net/10986/28917 |
| Summary: | This paper estimates the causal effects
of index insurance coverage on subjective well-being among
livestock herders in southern Ethiopia. The randomization of
incentives to purchase index-based livestock insurance and
three rounds of panel data are exploited to separately
identify ex ante welfare gains from insurance that reduces
risk exposure and ex post buyer's remorse effects that
may arise after the resolution of uncertainty. Insurance
coverage currently in force generates subjective well-being
gains that are significantly higher than the buyer's
remorse effect of an insurance that lapsed without paying
out. Given the temporal correlation in insurance purchase
propensity, failure to control for potential buyer's
remorse effects can bias downward estimates of welfare gains
from current insurance coverage. |
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