Microinsurance decisions: Gendered evidence from rural Bangladesh

Most index-based insurance products have been developed without giving explicit attention to gender. However, there is ample evidence that shocks affect men and women differently and that they allocate resources in different ways. In Bangladesh it is often assumed that women are less involved in agriculture, and therefore agricultural insurance might not be of interest to rural women. However, this assumption has not been tested in the field. This paper draws from a field research experiment to examine the gendered aspects of willingness to pay for index-based insurance in Bangladesh. Participants were presented with risky lotteries and a specific insurance contract and were asked to choose how much (if any) of the insurance they wanted to buy at a given price. The probability structure (whether the risk was catastrophic or moderate and whether there was high or low basis risk) varied within sessions. The price of the insurance varied across sessions. Each participant was also administered a short questionnaire, which collected information on demographic characteristics, risk preferences, agricultural risks, knowledge of insurance products, and asset ownership. Ninety-seven percent of the participants in the study decided to buy agricultural insurance, with no significant differences between men and women, even though women are less involved in agricultural decisionmaking. We find a small decrease in take-up for the low-probability event, driven by the women in the sample. When we examine the number of units bought, we find that men were likely to buy more units than women. Total wealth, as captured by total land owned, had no effect on units bought. However, among women total wealth mattered and had a positive correlation. Finally, we find that women had less education and lower financial literacy than their male counterparts, as well as less background in understanding agricultural risk. This placed them at a disadvantage when making insurance purchase decisions.