The social dilemma of microinsurance: Free-riding in a framed field experiment
Health shocks are among the most important unprotected risks for microfinance clients, but take-up of micro health insurance remains low. A framed field experiment with credit groups in Tanzania, eliciting demand for group versus individual insurance, attributes this to a social dilemma. In a contex...
| Autores principales: | , |
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| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Elsevier
2016
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/148498 |
| Sumario: | Health shocks are among the most important unprotected risks for microfinance clients, but take-up of micro health insurance remains low. A framed field experiment with credit groups in Tanzania, eliciting demand for group versus individual insurance, attributes this to a social dilemma. In a context of joint liability, insurance is a public good because clients can rely on contributions from group members to cope with health shocks. We hypothesize that clients have a private incentive to free-ride and forgo individual insurance even when full enrollment optimizes group welfare. The binding nature of group insurance eliminates such free-riding. Our experiment yields substantial support for this hypothesis. Whereas the demand for group insurance is high, a substantial share of clients forgoes individual insurance and relies on peers to repay their loan when falling ill. Group insurance can potentially increase low take-up rates. |
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