Ruth Vargas Hill|Miguel Robles|Francisco Ceballos
Demand for a Simple Weather Insurance Product in India: Theory and Evidence
International Food Policy Research Institute|International Food Policy Research Institute|International Food Policy Research Institute
abstract article analyzes demand simple rainfallbased weather insurance product among farmers rural india explore predictions standard expected utility theory framework nature demand terms price basis hedge risk aversion using data randomized control trial find demand behaves predicted falls price basis risk humpshaped risk aversion price sensitivity decreasing higher levels basis risk estimate negative price elasticity 058 find doubling distance reference weather station decreases demand 18 results indicate improving pricing quality insurance products directly increase demand addition examine impact insurance training relative mechanisms designed increase understanding evidence suggests increased incentives learn learning using effective increasing understanding demand finally contribute scarce evidence demand insurance time terms main interventions find effect premium subsidies persists time impact investments new weather stations diminishes effect increased training first season seems disappear second season importantly previously purchased insurance encourage future uptake receiving payout could reflect issues trust product insurance company constitutes important topic future research