Cash Transfers and Index Insurance: A Comparative Impact Analysis from Northern Kenya

75 Pages Posted: 11 Jan 2015 Last revised: 5 Jan 2018

See all articles by Nathaniel Duane Jensen

Nathaniel Duane Jensen

Cornell University - Dyson School of Applied Economics and Management; International Livestock Research Institute (ILRI)

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management

Andrew Mude

CGIAR - International Livestock Research Institute (ILRI)

Date Written: August 2017

Abstract

Cash transfers and index insurance have become popular interventions by development agencies worldwide, yet surprisingly little is known about these programs’ comparative impacts on participant behavior or well-being. This paper exploits exogenous variation in program participation and panel data from Kenya to compare the causal impacts of a cash transfer program (HSNP) and an index-based insurance product (IBLI), which were implemented contemporaneously among the same population. We find that both programs benefit clients. HSNP improves child health, as measured by mid-upper arm circumference (MUAC), and helps households maintain their mobility-dependent livestock production strategies. Households with IBLI coverage make productivity increasing investments, reduce distress sales of livestock during droughts, and see a marked increase in income per adult equivalent. Estimating the impacts per total program costs reveals that the two programs perform comparably on average, while IBLI’s impacts per unit marginal cost are considerably larger than HSNP’s.

Keywords: social protection, safety nets, HSNP, IBLI, social welfare

JEL Classification: D60, I38, O00

Suggested Citation

Jensen, Nathaniel Duane and Barrett, Christopher B. and Mude, Andrew, Cash Transfers and Index Insurance: A Comparative Impact Analysis from Northern Kenya (August 2017). Journal of Development Economics, Vol. 129, 2017, Available at SSRN: https://ssrn.com/abstract=2547660 or http://dx.doi.org/10.2139/ssrn.2547660

Nathaniel Duane Jensen (Contact Author)

Cornell University - Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

International Livestock Research Institute (ILRI) ( email )

P.O. Box 30709
Nairobi 00100
Kenya

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management ( email )

315 Warren Hall
Ithaca, NY 14853-7801
United States
607-255-4489 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://aem.cornell.edu/faculty_sites/cbb2/

Andrew Mude

CGIAR - International Livestock Research Institute (ILRI) ( email )

P.O. Box 5689
Ababa
Kenya

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