Replication Data fo Chapter 3: The effect of Weather Index Insurance on social capital - Evidence from rural Ethiopia

This study examines the impact of Weather Index Insurance (WII) on social capital. We measure social capital using a lab-in-the-field experiment and relate it to the actual purchase of WII. To account for the non-random uptake of WII, we use an instrumental variable approach. We find that WII crowds out social capital - insured households contribute significantly less to the public good than uninsured households. Our findings from the experiment are corroborated using real-life measures of social capital, including informal transfers to fellow villagers and financial contributions to community projects. We find support for two channels underlying these results: (i) WII creates positive externalities on uninsured households, which induces them to free- ride. Anticipating this, insured households respond by lowering their investment in social capital. And (ii), WII increases perceptions of self-sufficiency that is, insured households need to rely less on others in times of need.