PT  - JOURNAL ARTICLE
AU  - Kinnan, Cynthia
TI  - Distinguishing barriers to insurance in Thai villages
AID  - 10.3368/jhr.57.1.0219-10067R1
DP  - 2021 Feb 10
TA  - Journal of Human Resources
PG  - 0219-10067R1
4099  - http://jhr.uwpress.org/content/early/2021/02/03/jhr.57.1.0219-10067R1.short
4100  - http://jhr.uwpress.org/content/early/2021/02/03/jhr.57.1.0219-10067R1.full
AB  - Informal insurance is an important risk-coping mechanism in developing countries, yet this risk sharing is incomplete. Models of limited commitment, moral hazard, and hidden income have been proposed to explain incomplete informal insurance. This paper shows that the way history matters in forecasting consumption can be used to distinguish hidden income from limited commitment and moral hazard. The paper also develops a non-parametric test that is robust to non-classical measurement error and individual-level heterogeneity. In panel data from rural Thailand, limited commitment and moral hazard are rejected. The predictions of the hidden income model are supported by the data.