Saving, Risk Sharing, and Preferences for Risk

Saving, Risk Sharing and Preferences for Risk

Saving decisions are made jointly by household members who generally earn risky incomes. Consequently, to interpret saving patterns it is crucial to analyze the relationship between intrahousehold risk sharing and intertemporal choices. To that end in this paper the household is characterized as a group of agents with possibly heterogeneous preferences making efficient decisions. Two results ar...

Diversification of Risk and Saving*

This paper provides evidence that domestic opportunities to share risk have contributed to lower rates of private saving. Two econometric procedures are used in the analysis: (1) traditional instrumental variables estimation and (2) dynamic panel methods. The results reveal a negative relationship between domestic opportunities to diversify risk and aggregate private saving rates in a cross-sec...

Risk Pooling, Risk Preferences, and Social Networks

Using data from a field experiment conducted in seventy Colombian municipalities, we investigate who pools risk with whom when risk pooling arrangements are not formally enforced. We explore the roles played by risk attitudes and network connections both theoretically and empirically. We find that pairs of participants who share a bond of friendship or kinship are more likely to (1) join the sa...

Financing for Healthcare in Sub-Saharan Africa and South Asia: Risk Pooling & Risk-Sharing Arrangements; Essential Strategy for Overcoming Poverty Costs

Risk Management and Saving: On Income Effects and Background Risk

We study the interplay of intertemporal risk management and saving decisions. We define risk management broadly by allowing the activity to influence the severity of loss, the probability of loss, or both simultaneously. Due to the similar cost-benefit structure of risk management and saving decisions a substitution effect arises whose implications are analyzed for changes in income and backgro...