Template-type: ReDIF-Paper 1.0
Author-Name: Nigus, Halefom
Author-Email: nigus@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Author-Name: Nillesen, Eleonora
Author-Email: nillesen@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Author-Name: Mohnen, Pierre
Author-Email: mohnen@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: The effect of weather index insurance on social capital: Experimental evidence 
	 from Ethiopia
Abstract: In this study, using data from lab-in-the-field experiment, we explore 
	 whether the introduction of weather index insurance crowds in or crowds 
	 out social capital in northern Ethiopia. We use contributions in the 
	 public good game as a measure of social capital. We find that weather 
	 index insurance crowds out social capital. The free-riding problem 
	 created by the positive externality of weather index insurance and 
	 development of self-sufficiency behaviour are found to be the causal 
	 mechanisms behind the crowding out phenomenon. Our results indicate that 
	 formal insurance mechanisms do not occur in a vacuum and may have 
	 unintended effects. Hence, this study suggests that novel insurance 
	 product design and marketing strategies should be used to ameliorate 
	 such unintended effects.  
Classification-JEL: C93, G22, H41, O17
Keywords: Weather index insurance, social capital, public goods game, Ethiopia
Series: UNU-MERIT Working Papers
Creation-Date: 20180219
Number: 2018-007
File-URL: https://unu-merit.nl/publications/wppdf/2018/wp2018-007.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2018007