Richard Gallenstein, Catholic University of America
Does Inequality Impede Risk Management? Evidence from a Lab-in-the-Field Experiment in Ghana
Date and Location
Tuesday, December 7, 2021, 4:10 PM - 5:30 PM
ARE Conference Room, 2102 Social Sciences and Humanities
Low income households in agrarian developing economies face considerable livelihood risks, which have
serious negative impacts on household welfare. Incomplete financial markets present an external constraint
on risk management and are well studied in the literature. A growing literature has focused on internal
constraints on development, which can negatively affect saving and investment behavior. Here I propose
that internal constraints may also hinder risk management. Specifically, I present a theoretical model that
explores how fairness preferences may create an internal constraint on risk-sharing, particularly in a context
of wealth inequality. To test this theory, I utilize a lab experiment, conducted in Ghana, to investigate the
impact of wealth inequality on utilization of risk-management tools and explore how fairness preferences may
mediate this effect. I find that inequality reduces risk-sharing and increases demand for insurance. Moreover,
I find evidence that fairness preferences create an internal constraint on risk-sharing under inequality.
Subscribe to Upcoming Seminars
Individual seminar and workshop announcements are circulated via separate mailing lists. To subscribe, send an email to the relevant list:
- Click here to subscribe to the Departmental Seminars.
- Click here to subscribe to the Agricultural Economics Workshop.
- Click here to subscribe to the Development Workshop.
- Click here to subscribe to the Econometrics Seminars.
- Click here to subscribe to the Environmental and Resource Economics Workshop and the Environmental and Energy Economics Workshop.
Contact Us2116 Social Sciences and Humanities
University of California, Davis
One Shields Avenue
Davis, CA 95616
Main Office: 530-752-1515
Student Advising Services: 530-754-9536
DeLoach Conference Room: 530-752-2916
Main Conference Room: 530-754-1850