Microinsurance decisions: Evidence from Ethiopia

This study reviews evidence collected from a microinsurance field experiment in rural Ethiopia. The experiment involves collecting data from individuals in order to predict the shape of the demand curve for indexed insurance. The study finds that the relationship between demand for index insurance and wealth levels is none linear and that individuals with intermediate levels of wealth have the highest demand while the richest and the poorest exhibited much lower demand. This observed demand curve is then compared with demand curves that have been generated using different economic theories regarding how people make economic decisions.