Social network structure and risk sharing in villages

Ou Yang, Bin Jiang, Jun Sung Kim, Chuhui Li

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This paper studies how the structure of friendship networks affects risk sharing in villages. Using techniques for partially identified econometric models, we construct a sharp bound on the true risk-sharing rate, which takes into account nomination errors in survey responses, and implement interval estimation. We show that the diameter of a network has a negative and significant impact on risk sharing. Our result implies that policymakers can effectively improve risk sharing between households by adopting policies that increase the network connectivity of individuals in the periphery of the social network.

Original languageEnglish
Article number20170263
Number of pages7
JournalBE Journal of Economic Analysis and Policy
Volume18
Issue number3
DOIs
Publication statusPublished - 1 May 2018

Keywords

  • diameter
  • nomination errors
  • risk sharing
  • social networks

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