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

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.