Testing for full insurance using exogenous information

John C. Ham, Kris Jacobs

Research output: Contribution to journalArticle

Abstract

We strongly reject the full-insurance hypothesis, using testing variables that are not decision variables for the households under investigation. We find that households are not insured against changes in the unemployment rate associated with the household head's occupational category. Using this exogenous information, we also investigate the appropriateness of exogeneity assumptions on idiosyncratic variables that have been used as testing variables in the full-insurance literature. It is shown that several exogeneity assumptions made in the existing literature are potentially problematic.

Original languageEnglish (US)
Pages (from-to)387-397
Number of pages11
JournalJournal of Business and Economic Statistics
Volume18
Issue number4
DOIs
StatePublished - Oct 2000

Keywords

  • Exogeneity assumptions
  • Full insurance
  • Risk sharing
  • Sectoral shocks

ASJC Scopus subject areas

  • Statistics and Probability
  • Social Sciences (miscellaneous)
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty

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