Abstract |
This paper examines whether consumption expenditure of households in rural India is insured against ailments. We formulate a model where agents face shocks to their income and utility due to ailments and share such risks through a bargaining process. The predictions of the model are tested using data generated from the 52nd round of National Sample Survey. We find that except for some scheduled tribe households and three out of 77 regions in India, villagers seem to be insured against health shocks. The results are robust to regional heterogeneity and data truncation on the basis of caste and occupation. We do not, however, find risk sharing to be complete. Hence, it may be that health is partially self-insured. |