Friederike Lenel: Choice Conditional Solidarity

We investigate the interplay of formal insurance and social preference driven support in a lab-in-the-field experiment conducted in Cambodia. We analyze to what extent people condition their support on whether the person in need could have avoided her neediness by purchasing insurance.

Organised by Agricultural Economics and Rural Policy

Thu 13 April 2017 12:30 to 13:30

Venue Leeuwenborch, gebouwnummer 201
Room C70

Experimental Evidence from Cambodia

We find that on average people reduce their support by one third. We show that this reduction is driven by a response to the recipient’s choice not by a response to the recipient’s intention. We argue that this difference is driven by solidarity norms that vary with the availability of insurance.

There is considerable heterogeneity in transfer behavior. While 44% reduce their transfers when the recipient had the choice of insurance; 43% transfer the same amount independent of the insurance availability. In a second step we investigate this heterogeneity by contrasting the people’s transfer decisions in the experiment to their engagement in informal support in real life. We show that people who are more engaged in informal support are significantly more likely to condition their solidarity on insurance availability. This finding sheds new light on the relationship between formal and informal insurance.