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Risk-Sharing Networks and Insurance Against Illness Stefan Dercon, CSAE Joachim De Weerdt, CSAE and Katholieke Universiteit Leuven Download the Paper (PDF format) - October 18, 2002 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing. ABSTRACT: ABSTRACT Most risk-sharing tests on developing country data are conducted at the level of the village; generally, the full risk-sharing hypothesis is rejected. This paper uses detailed data on all insurance networks within a village in Tanzania; networks are not clustered but largely overlapping. We test whether full risk-sharing occurs within these networks. We find that even within these smaller networks risk is not fully shared. In the event of a health shock, households reduce overall consumption: they cut back non-food consumption by roughly 30%, while protecting their food consumption. SUGGESTED CITATION: Stefan Dercon and Joachim De Weerdt, "Risk-Sharing Networks and Insurance Against Illness " (October 18, 2002). The Centre for the Study of African Economies Working Paper Series. Working Paper 175. http://www.bepress.com/csae/paper175