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Marc F. Bellemare Posts

Published December 3, 2012

Managing Basis Risk with Index Insurance in West Africa

Exposure to risk is one of life’s few certitudes. For people who live in developing countries, where underdevelopment almost always extends to financial markets, and where financial instruments to hedge against risk are fewer and further between than in industrialized countries, risk is even more prevalent. The rise of microfinance over the last 20 years has brought about the development of financial instruments designed to protect the poor against some of the risk they face. We first develop an innovative index insurance contract for West African cotton producers, whose harvests are highly variable. The main feature of this contract is that relative to commonly used index insurance contracts, it considerably reduces the basis risk faced by West African cotton producers. We then describe an ongoing evaluation of the impacts of the double-trigger insurance contract in Mali and Burkina Faso.

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Published November 30, 2012

China’s Great Famine

Courtesy of one of the students in my development seminar, here are links to a two-part NPR story about China’s famine of 1958-1962: part 1 and part 2.

Between 1958 and 1962, an estimated 20 to 43 people died of hunger in China, which China’s official statistics claiming 15 million deaths and the highest estimates reporting a death toll of 45 million. For comparison, the death toll from World War 1 is estimated to be about 17 million. During the Chinese famine, people eventually survived on anything they could find, eventually going so far as to eat their dead and their own children.

The NPR story discusses Tombstone, a book which just came out in English and which took Chinese reporter Yang Jisheng 10 years of working in secrecy to write. I’m about 100 pages into the book. It is a fascinating and monumental account of China’s Great Famine. And as one might reasonably expect, it is banned in China.

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Published November 29, 2012

Mastery

We live in a world that seems increasingly beyond our control. Our livelihoods are at the whim of globalized forces. The problems that we face — economic, environmental, and so on — cannot be solved by our individual actions. Our politicians are distant and unresponsive to our desires. A natural response when people feel overwhelmed is to retreat into various forms of passivity. If we don’t try too much in life, if we limit our circle of action, we can give ourselves the illusion of control. The less we attempt, the less chances of failure. If we can make it look like we are not really responsible for our fate, for what happens to us in life, then our apparent powerlessness is more palatable. For this reason we become attracted to certain narratives: it is genetics that determines much of what we do; we are just products of our times; the individual is just a myth; human behavior can be reduced to statistical trends.

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