In recent years, economists have evolved a theory of poverty traps in ways that have changed how we think about creating opportunity for those in desperate need, suggesting new directions that could indeed lead us to the global end of poverty.
Index insurance shows considerable promise, especially in settings like the arid and semi-arid lands of east Africa where conventional insurance to cover potentially catastrophic herd losses does not exist.
Index-based livestock insurance (IBLI), aims to protect against the covariate risk of catastrophic livestock loss due to drought. Understanding what determines access to IBLI by gender can shape strategies to equitably provide access to this and other innovative risk management products.
An important aspect of this evaluation will explore whether or not the asset accumulation and productivity effects of insurance are sufficiently robust that they create a case for subsidizing insurance premiums as an alternative to cash transfers or food aid.
Unlike abstract questions about whether people might “like” to have insurance, the games put the actual product on the table with its market price attached.
Careful analysis of the links between risk, mediating mechanisms and welfare dynamics can lead to informed and effective strategies that help households protect and accumulate assets, leading in turn to a foundation for poverty reduction and economic growth.
