Characterising informal risk sharing in family networks: Group size and informal risk sharing in Malawi

This dataset contains the analysis data file for the paper "Group Size and Efficiency of Informal Risk Sharing" by Fitzsimons, Malde and Vera-Hernandez (2015). It investigates how household consumption varies in response to crop losses by the number of extended family relatives of the household head and spouse in rural Malawi. A second related ReShare depository titled "Characterising risk sharing in extended family networks: Socially close and distant connections" includes files associated with another study conducted under the same grant using data on extended family in rural Mexico.<p>Risk is extremely prevalent in rural areas of developing countries, but markets for credit and insurance are undeveloped and government-provided social insurance is very rare. Households in these contexts resort to informal tools, such as gifts and inter-personal transfers, to share idiosyncratic risk. Such informal risk sharing occurs within social networks, with family networks, particularly, forming a “natural” risk sharing institution.

This research aims to deepen our understanding of risk sharing in family networks, focusing explicitly on the role of network structure (representation of who is related to who). This is likely important because many informal tools employed for risk sharing rely on bilateral relationships. Therefore, who one is linked with and who their links are further linked with will shape both how risk is shared and the amount shared.

Specifically, this research uses unique data from Mexico and Malawi with information on family ties and socio-economic variables to:
1. Provide empirical evidence on the relevance of socially close and distant connections for risk sharing
2. Evaluate the empirical importance of the quantity and quality of connections for risk sharing
3. Investigate effectiveness of family connections in providing insurance when sub-sets of them can walk away from an informal arrangement

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