TY  - JOUR
AU  - Cai,Hongbin
AU  - Chen,Yuyu
AU  - Fang,Hanming
AU  - Zhou,Li-An
TI  - Microinsurance, Trust and Economic Development: Evidence from a Randomized Natural Field Experiment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15396
PY  - 2009
Y2  - October 2009
UR  - http://www.nber.org/papers/w15396
L1  - http://www.nber.org/papers/w15396.pdf
N1  - Author contact info:
Hongbin Cai
Guanghua School of Management and IEPR
Peking University
Beijing 100871
China
E-Mail: hbcai@gsm.pku.edu.cn

Yuyu Chen
Applied Economics Department
Guanghua School of Management
Peking University
Beijing, 100871 
E-Mail: Chenyuyu@gsm.pku.edu.cn

Hanming Fang
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-7767
Fax: 215-573-2057
E-Mail: hanming.fang@econ.upenn.edu

Li-An Zhou
Guanghua School of Management and IEPR
Peking University
Beijing 100871
CHINA
E-Mail: zhoula@gsm.pku.edu.cn
AB  - We report results from a large randomized natural field experiment conducted in southwestern China in the context of insurance for sows. Our study sheds light on two important questions about microinsurance. First, how does access to formal insurance affect farmers' production decisions? Second, what explains the low takeup rate of formal insurance, despite substantial premium subsidy from the government? We find that providing access to formal insurance significantly increases farmers' tendency to raise sows. We argue that this finding also suggests that farmers are not previously insured efficiently through informal mechanisms. We also provide several pieces of evidence suggesting that trust, or lack thereof, for government-sponsored insurance products is a significant barrier for farmers' willingness to participate in the insurance program.
ER  -