TY  - JOUR
AU  - Chiappori,Pierre-André
AU  - Samphantharak,Krislert
AU  - Schulhofer-Wohl,Sam
AU  - Townsend,Robert M.
TI  - Heterogeneity and Risk Sharing in Village Economies
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16696
PY  - 2011
Y2  - January 2011
UR  - http://www.nber.org/papers/w16696
L1  - http://www.nber.org/papers/w16696.pdf
N1  - Author contact info:
Pierre-Andre Chiappori
Department of Economics
Columbia University
1009A International Affairs Building
420 West 118th St.
New York, NY 10027
E-Mail: pc2167@columbia.edu

Krislert Samphantharak
IR/PS
UC, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0519
Tel: 858/534-0627
Fax: 858/534-3939
E-Mail: krislert@gmail.com

Sam Schulhofer-Wohl
Research Department
Federal Reserve Bank of Minneapolis
90 Hennepin Ave.
Minneapolis MN 55480-0291
Tel: (612) 204-5484
E-Mail: wohls@minneapolisfed.org

Robert Townsend
Department of Economics
MIT
50 Memorial Drive, E52-252c
Cambridge, MA 02142
Tel: 617/452-3722
Fax: 617/253-1330
E-Mail: rtownsen@mit.edu
AB  - We measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model and complement  the results with a measure based on optimal portfolio choice. Among households with relatives living in the same village, full insurance cannot be rejected, suggesting that relatives provide something close to a complete-markets consumption allocation. There is substantial heterogeneity in risk preferences estimated from the full-insurance model,  positively correlated in most villages with portfolio-choice estimates. The heterogeneity matters for policy: Although the average household would benefit from eliminating village-level risk, less-risk-averse households who are paid to absorb that risk would be worse off.
ER  -