The Impact of Index Rainfall Insurance:
Evidence from a Field Experiment in
Gujarat
Raghab Chattopadhyay, Shawn Cole, Vivek Shah,
Dan Stein, Jeremy Tobacman
Jeremy Tobacman
Wharton and NBER
February 12, 2011
Field Experiment Structure
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Randomizations
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At the village level, in access to insurance Tvt
At the household level, in marketing of insurance,
for which we have a vector Mit
Outcome variables
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Consumption
Assets
Transfers
Production choices
Village-Level Empirical Strategy
Aggregate controls and outcomes to the
village level
 OLS
Outcomevt = β0 + β1InsCoveragevt + Controls + εvt
 Reduced-form
Outcomevt = β0 + β1Tvt+ Controls+ εvt
 IV
Instrument for InsCoverageit with Tivt
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Household-Level Empirical Strategy
OLS
Outcomeit = β0 + β1InsCoverageit + Controls + εit
 First stage
InsCoverageit = β0 + β1Mit+ Controls+ εit
 IV
Instrument for InsCoverageit with Mit
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Table List
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T1: Summary statistics of treatments, coverage, and
payouts; demonstrate balance of treatments
T2: Summary statistics of other characteristics;
demonstrate balance
T3-Tk: Village-level regressions, one outcome variable
per table; columns perform OLS/RF/IV and contain
different sets of controls
Appendix Table: First stage regressions, columns contain
different sets of controls
T{k+2}-T{2k+3}: Individual-level regressions, one
outcome variable per table; columns perform OLS/IV and
contain different sets of controls
T{2k+4}: 3SLS effects of payouts on the list of outcomes
Shawn suggests k~2
Controls
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Village-level regressions
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Village fixed effects
District fixed effects
Year effects
Household-level regressions
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Time-0 demographics
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+Year effects
+Village fixed effects
+Rainfall gauge x year effects
+Village x year effects
+random effects
Household fixed effects
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+Year effects
+Village x year effects
+Changing demographics (wealth, household size,
non-agricultural income)
Outcome variables
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The list above
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Also,
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Consumption
Assets and liabilities
Net transfers, ie, loans and gifts to and from friends and family
Production choices
 More or larger plots, agricultural input choices, irrigation
status
Attitudes toward insurance
Purchase of other types of insurance
Labor supply, out-migration, survey attrition
Health (food adequacy) and education (ie, enrollment of kids, by
gender and age)
Also,
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Interactions with irrigation status
Interactions with lots of other demographics
Spillovers: interact endogenous variables with adoption of others
in the village
Appendix tables
TA1: Only instrument for household level
adoption with the first or second year’s
marketing messages
 TA2: Individual-level regressions with only
village-level variation
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Issues
Arrival/departure of villages and
households in the sample
 Consumption and wealth indexes
 Dynamics of demand
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If there is learning about the product or about
rainfall, or if there are reductions in ambiguity,
then exclusion