MILK Brief #31: What would you have done without insurance. Examining the counterfactual across 16 Client Math studies

The MILK Project’s 16 Client Math studies chronicle the ways in which microinsurance clients cope with large and small shocks. But if these clients had to cover the costs of the shock on their own, what would they have done? This brief follows the MILK team’s quest for this counterfactual using two methods:(1) interviewing uninsured people who suffered similar shocks and (2) by asking insured people what they would have done without insurance.

Key Findings:

• At first glance, the results match up closely: the most common strategies used by the uninsured were the same as the most common strategies predicted by the insured. Both methods give us a good sense of which strategies are most available and desirable in the absence of insurance.
• Insured clients may also have an exaggerated perception how burdensome the shock would have been, a possible sign of how highly they value, or even overvalue, their insurance. This suggests a potentially powerful link between the tangibility of a product and the perception of its value.
• Finally, we propose that the insured respondents themselves are a compelling counterfactual. Based on empirical comparisons between insured and uninsured, we posit that the strategies that insured clients use in combination with insurance are likely to be the same strategies that they would have used without insurance.