Replication data for chapter 4: This chapter examines the effect of smallholder farmers’ access to a formal climate risk transfer mechanism on their risk preferences. Survey and experimental data were collected from smallholder farmers that have access to weather index-based crop insurance (WICI) in Ethiopia. We use an endogenous switching probit (ESP) model to address self-selection and simultaneity biases. Results from the ESP model show that farmers who purchased WICI are less likely to be risk-averse compared with the counterfactual scenario of being non-purchaser farmers. Similarly, non-purchasers would have attained a significant reduction in their risk-aversion if they had taken up the insurance product. We also find that WICI has a positive and statistically significant effect on farmers’ real-life risk-taking behavior as exemplified by mineral fertilizer use.
CC0 1.0
- Weather index-based crop insurance
- Endogenous risk preferences
- Experimental risk elicitation
- Endogenous switching probit
- q54 - "Climate; Natural Disasters; Global Warming"
- g32 - "Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill"