Book
Insurance Against Poverty

Poor people in developing countries are often affected by droughts, floods, illness, crop failure, job loss, and economic downturns. Much of their energy goes into coping with these shocks and into day-to-day survival. While insurance and credit markets, combined with widespread social security, provide an important cushion against poverty in rich countries, the need for immediate survival may lock the poor into persistent poverty in developing countries. The poor in developing countries do have informal mechanisms to cope with risk and misfortune. These are based on income diversification, risk avoidance, self-insurance by saving together with family, and community-based mutual assistance. Nevertheless, the scope of these mechanisms remains limited. Repeated individual-specific shocks such as illness or pests, or covariate risks associated with drought, flood, or recession, undermine the ability of individuals and their families to cope with risk.

Table of contents
  1. Part I: Risk and Insurance: Evidence
    1. Risk, Insurance, and Poverty: A Review
    Stefan Dercon
    More Working Paper | Income Risk, Coping Strategies and Safety Nets
  2. Part I: Risk and Insurance: Evidence
    2. Consumption Smoothing Across Space: Testing Theories of Risk-Sharing in the ICRISAT Study Region of South India
    Jonathan Morduch
    More Working Paper | Consumption Smoothing Across Space
  3. Part II: Risk and Poverty: Theory
    3. The Two Poverties
    Abhijit V. Banerjee
  4. Part II: Risk and Poverty: Theory
    4. Inequality and Risk
    Marcel Fafchamps
    More Working Paper | Inequality and Risk
  5. Part III: Risk and Poverty: Persistence
    5. Household Income Dynamics in Rural China
    Jyotsna Jalan and Martin Ravallion
    More Working Paper | Household Income Dynamics in Rural China
  6. Part III: Risk and Poverty: Persistence
    6. Health, Shocks, and Poverty Persistence
    Stefan Dercon and John Hoddinott
    More Working Paper | Health, Shocks and Poverty Persistence
  7. Part III: Risk and Poverty: Persistence
    7. The Macroeconomic Repercussions of Agricultural Shocks and their Implications for Insurance
    Paul Collier
    More Working Paper | The Macroeconomic Repercussions of Agricultural Shocks and their Implications for Insurance
  8. Part IV: Identifying the Vulnerable
    8. Measuring Vulnerability to Poverty
    Gisele Kamanou and Jonathan Morduch
    More Working Paper | Measuring Vulnerability to Poverty
  9. Part IV: Identifying the Vulnerable
    9. Targeting and Informal Insurance
    Ethan Ligon
    More Working Paper | Targeting and Informal Insurance
  10. Part V: Risk and Social Institutions
    10. Risk-Sharing and Endogenous Network Formation
    Joachim De Weerdt
    More Working Paper | Risk-Sharing and Endogenous Network Formation
  11. Part V: Risk and Social Institutions
    11. Is a Friend in Need a Friend Indeed?: Inclusion and Exclusion in Mutual Insurance Networks in Southern Ghana
    Markus Goldstein, Alain de Janvry and Elisabeth Sadoulet
    More Working Paper | Is a Friend in Need a Friend Indeed?
  12. Part V: Risk and Social Institutions
    12. The Gradual Erosion of the Social Security Function of Customary Land Tenure Arrangements in Lineage-Based Societies
    Jean-Philippe Platteau
    More Working Paper | The Gradual Erosion of the Social Security Function of Customary Land Tenure Arrangements in Lineage-Based Societies
  13. Part VI: Safety Nets and Social Institutions
    13. Do Public Transfers Crowd Out Private Transfers?: Evidence from a Randomized Experiment in Mexico
    Pedro Albarran and Orazio P. Attanasio
    More Working Paper | Do Public Transfers Crowd Out Private Transfers?
  14. Part VI: Safety Nets and Social Institutions
    14. Food Aid and Informal Insurance
    Stefan Dercon and Pramila Krishnan
    More Working Paper | Food Aid and Informal Insurance
  15. Part VI: Safety Nets and Social Institutions
    15. Why is there Not More Financial Intermediation in Developing Countries?
    Jonathan Conning and Michael Kevane
    More Working Paper | Why Isn't There More Financial Intermediation in Developing Countries?
  16. Part VII: Developing Better Protection for the Poor
    16. Can Food-for-Work Programmes Reduce Vulnerability?
    Christopher B. Barrett, Stein T. Holden and Daniel C. Clay
    More Working Paper | Can Food-for-Work Programmes Reduce Vulnerability?
  17. Part VII: Developing Better Protection for the Poor
    17. Learning from Visa®?: Incorporating Insurance Provisions in Microfinance Contracts
    Loic Sadoulet
    More Working Paper | Incorporating Insurance Provisions in Microfinance Contracts
  18. Part VII: Developing Better Protection for the Poor
    18. Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks?
    Jerry R. Skees, Panos Varangis, Donald F. Larson and Paul Siegel
    More Working Paper | Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks?
  19. Part VIII: Conclusion
    19. Risk, Poverty, and Public Action
    Stefan Dercon
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Endorsements

'The volume begins with a very informative and well-thought-out review essay on risk and insurance by Dercon himself. This overview would be a useful addition to syllabi for advanced undergraduate or graduate development economics courses and to anyone wanting to get up to speed on the vast literature devoted to the topic. More generally, the essays in this volume will probably be most useful to scholars interested in a particular topic or in evidence and information for a particular country.' - Anna Paulson, Federal Reserve Bank of Chicago, Economic Development and Cultural Change, 55: 625–627, April 2007

'To conclude, this book provides a set of useful answers on crucial policy questions and deserves wide reading. It also points to the potential for a rich agenda of research questions for development economists to address.' - Flore Gubert, IRD, DIAL, Paris, Journal of African Economies, 16 (1): 172–175, September 2006