Gender Differences In Demand For Index Based Livestock Insurance

Abstract

Risk management is an important aspect of helping households avoid and escape chronic poverty throughout the world. In many settings, women and their dependents are disproportionately negatively affected by poverty and shocks, suggesting particular applicability of improved risk management. Indexbased insurance products are an innovative approach to risk management that circumvents difficulties associated with transactions costs and information asymmetries that plague standard insurance products in developing countries. General demand for index-based insurance products remains limited despite its theoretical strengths, and very little is known about women's demand. This paper examines the relationship between gender and demand for index-based livestock insurance (IBLI) among Boran pastoralists in southern Ethiopia. It uses three years of household survey data and a series of qualitative interviews to investigate which demand factors for IBLI vary by gender. Results suggest that, though IBLI appears to be equitably accessed by men and women alike, the factors determining access may indeed vary by gender. Risk aversion and informal insurance influence IBLI demand differently for men and women. At the same time, baseline differences in financial literacy and herd size have a negative impact on women's demand, but lower education and smaller shares of income from livestock have a positive effect on IBLI demand by women.