Weather insured savings accounts

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Through a laboratory experiment in India, this paper assesses consumers' relative valuations of savings versus insurance when planning for risky rainfall in an attempt to measure potential demand for a new type of financial product that combines savings and rainfall insurance, the Weather Insured Savings Account (WISA). The study finds out that participants prefer both pure insurance and pure savings to any mixture of the two, and that this preference is most pronounced among those who are more risk averse. The results presented by the authors suggest that the introduction of a WISA is unlikely to be successful.

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Author: 

Daniel Stein, Jeremy Tobacman

Publisher: 

ILO

Number of pages: 

28

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