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JEEA-FBBVA LECTURE 2019: Consumption Insurance in Networks with Asymmetric Information: Evidence from Tanzania

Attanasio, O; Krutikova, S; (2020) JEEA-FBBVA LECTURE 2019: Consumption Insurance in Networks with Asymmetric Information: Evidence from Tanzania. Journal of the European Economic Association , 18 (4) pp. 1589-1618. 10.1093/jeea/jvaa030. Green open access

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Abstract

This paper uses a dataset from Tanzania with information on consumption, income, and income shocks within and across family networks. Crucially and uniquely, it also contains data on the degree of information existing between each pair of households within family networks. We use these data to construct a novel measure of the quality of information both at the level of household pairs and at the level of the network. We also note that the individual level measures can be interpreted as measures of network centrality. We study risk sharing within these networks and explore whether the rejection of perfect risk sharing that we observe can be related to our measures of information quality. We show that households within family networks with better information are less vulnerable to idiosyncratic shocks. Furthermore, we show that more central households within networks are less vulnerable to idiosyncratic shocks. These results have important implications for the characterisation of the empirical failure of the perfect risk-sharing hypothesis and point to the importance of information frictions.

Type: Article
Title: JEEA-FBBVA LECTURE 2019: Consumption Insurance in Networks with Asymmetric Information: Evidence from Tanzania
Open access status: An open access version is available from UCL Discovery
DOI: 10.1093/jeea/jvaa030
Publisher version: https://doi.org/10.1093/jeea/jvaa030
Language: English
Additional information: Copyright © The Author(s) 2020. Published by Oxford University Press on behalf of European Economic Association. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10116895
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