Insuring Well-Being? Buyer’s Remorse and Peace of Mind Effects From Insurance

We estimate the causal effects of index insurance coverage on subjective well-being among livestock herders in southern Ethiopia. By exploiting the randomized distribution of discount coupons and information treatments to instrument for the purchase of index-based livestock insurance, and three roun...

Full description

Saved in:
Bibliographic Details
Published in:American journal of agricultural economics 2019-04, Vol.101 (3), p.627-650
Main Authors: Tafere, Kibrom, Barrett, Christopher B., Lentz, Erin
Format: Article
Language:English
Subjects:
Agricultural economics
Bias
Coupons
Ethiopia
Index insurance
Insurance
Insurance coverage
Livestock
Panel data
Pastoralism
Remorse
Risk reduction
subjective well‐being
Uncertainty
vignettes
Welfare
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We estimate the causal effects of index insurance coverage on subjective well-being among livestock herders in southern Ethiopia. By exploiting the randomized distribution of discount coupons and information treatments to instrument for the purchase of index-based livestock insurance, and three rounds of panel data, we 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. We find that current insurance coverage generates subjective well-being gains that are significantly higher than the buyer’s remorse effect of an insurance policy that lapsed without paying out. Given the positive correlation in insurance purchase propensity over time, failure to control for potential buyer’s remorse effects can bias downward estimates of welfare gains from current insurance coverage.
ISSN:0002-9092
1467-8276
DOI:10.1093/ajae/aay087