Health and Death Risk and Income Decisions: Evidence from Microfinance

19 Pages Posted: 27 Jul 2009

See all articles by Grant Jacobsen

Grant Jacobsen

University of Oregon - School of Planning, Public Policy, and Management

Date Written: July 8, 2008

Abstract

This paper examines the relationship between health and death risk and income decisions in rural Pakistan. Using data from a microfinance institution, we analyse how insurance against hospitalisation and accidental death influences the purpose of microcredit loans. After correcting for the endogeneity of insurance uptake, we find that individuals are more likely to maintain the same loan purpose as their previous loan if they are insured. The result suggests that households that are insured against hospitalisation and accidental death pursue less diversified income portfolios. This movement away from diversification may increase expected profits.

Keywords: health insurance, microfinance, income decisions, health risk, death risk

JEL Classification: D13, I12

Suggested Citation

Jacobsen, Grant, Health and Death Risk and Income Decisions: Evidence from Microfinance (July 8, 2008). Available at SSRN: https://ssrn.com/abstract=1439442 or http://dx.doi.org/10.2139/ssrn.1439442

Grant Jacobsen (Contact Author)

University of Oregon - School of Planning, Public Policy, and Management ( email )

1280 University of Oregon
Eugene, OR 97403
United States

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