Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87507
Authors: 
Janssens, Wendy
Kramer, Berber
Year of Publication: 
2012
Series/Report no.: 
Tinbergen Institute Discussion Paper 12-145/V
Abstract: 
Health shocks are among the most important unprotected risks for microfinance clients, but the take-up of micro health insurance typically remains limited. This pa- per attributes low enrollment rates to a social dilemma. Our theory is that in jointly liable groups, insurance is a public good. Clients can rely on contributions from group members to cope with shocks. Less risk averse clients have a private incentive to free-ride and forgo individual insurance even when insurance optimizes group welfare. The binding nature of insurance offered at the group level eliminates such free-riding. A framed public good experiment in Tanzania, eliciting demand for group versus individual microinsurance, yields substantial support for this hypothesis. This provides a potential explanation for low take-up rates.
Subjects: 
Health insurance
microfinance
risk-sharing
public goods experiment
JEL: 
D71
I13
G21
Document Type: 
Working Paper

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