Inequality and Risk Management: Evidence from a Lab Experiment in Ghana

Abstract

Wealth inequality has been growing throughout the world in recent decades. In this article I explore the impact of inequality on risk-management decisions in a developing country context. I use a lab-in-the-field experiment that introduces exogenous variation in inequality to investigate the impact of inequality on risk-sharing and insurance uptake decisions. I find that inequality does influence formation of risk-sharing agreements and demand for insurance.