Marketing complex financial products in emerging markets: Evidence from rainfall insurance in India
In Research Paper #1, researchers from Harvard Business School, IGIDR and Wharton School conducted a field experiment in which rainfall insurance, a financial derivative for managing rainfall risk in agriculture whose payouts are linked to the amount of rainfall measured at a designated station, was offered to 600 farmers in India. A customized financial literacy and insurance education module communicating the need for personal financial management and formal hedging of yield risks was offered to randomly selected farmers. The effect of the financial literacy training and six marketing treatments are evaluated using a randomized control trial. The study provides some of the first evidence that financial education can influence financial behaviour. Results also reveal extremely low financial awareness, cognitive limitations and poor comprehension of rainfall insurance among the farmers being studied.