Demand for temperature and rainfall index insurance in India. (4th April 2019)

• Record Type: Journal Article
• Authors: Matsuda, Ayako; Kurosaki, Takashi
• Is Part Of: Agricultural economics. Volume 50:Number 3(2019)
• Page Start: 353
• Page End: 366
• Publication Date: 2019-04-04
• Subjects: G22 -- O12 -- O13 -- O16 -- Q12 -- Temperature index insurance -- Rainfall index insurance -- Subsidy experiment -- India; Agriculture -- Economic aspects -- Periodicals; 338.105
• DOI: 10.1111/agec.12489
• Languages: English
• ISSNs: 0169-5150

Abstract

Abstract: Weather index insurance has been attracting considerable attention from academics and policymakers. This study investigates the demand for two types of index insurance sold in India: temperature index insurance for dry season and rainfall index insurance for subsequent monsoon season. Using data from randomized subsidy experiments, we separate purchase and quantity decisions and investigate how demand for rainfall insurance is correlated with demand for temperature insurance sold in the previous season. We find that the price (premium) does not influence purchase decisions per se but does significantly influence quantity decisions. The quantity demanded is less price‐sensitive for subsequent rainfall insurance than it is for temperature insurance. We also find that purchasers of temperature insurance tend to buy rainfall insurance more often than nonpurchasers do. However, a one‐time subsidy does not influence on subsequent demand, suggesting no price‐anchoring effect.