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Category: Project

Description: Study overview Year to year variation in yields and harvests as a result of drought can have devastating effects on smallholder farmers, which are projected to increase with climate change (Parry et al 2007). One potential mitigation is rainfall insurance which tracks precipitation using a combination of satellite and weather station data. However, literature highlights that major barriers to the uptake of such products are trust issues (Cole et al 2013) and scarcity of mental resources, particularly as planting time approaches (Mullainathan and Shafir 2013; Lichand and Mani 2016). This paper explores how cognitive load and endorsement by a trusted individual affect take-up of a novel ‘commoditised’ rainfall insurance product. I also test the combination of these treatments, i.e. whether the influence of a trusted individual is greater in a cognitive load context. Finally I disaggregate the effects of trust and cognitive load for risk averse and ambiguity averse individuals, as well as by wealth, gender and previous exposure to rainfall insurance.