Heterogeneity and risk sharing in village economies

Description

"We measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model and complement the results with a measure based on optimal portfolio choice. Among households with relatives living in the same village, full insurance cannot be rejected, suggesting that relatives provide something close to a complete-markets consumption allocation. There is substantial heterogeneity in risk preferences estimated from the full-insurance model, positively correlated in most villages with portfolio-choice estimates. The heterogeneity matters for policy: Although the average household would benefit from eliminating village-level risk, less-risk-averse households who are paid to absorb that risk would be worse off"--National Bureau of Economic Research web site.

Subjects

Series Statement

• NBER working paper series -- working paper 16696
• Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16696.

Links

• http://www.nber.org/papers/w16696