The authors present a randomized fieldexperiment measuring the direct impact and social networkspillovers of providing financial literacy and discountvouchers on farmersdecision to purchase index-baseddrought insurance. To examine this, the authors formclusters by grouping together geographically proximatehouseholds. Clusters were then randomly assigned to receiveeither a high or low intensity of each of the followingtreatments: financial literacy materials and discountvouchers off the price of insurance. The authors find socialnetwork spillovers to the provision of financial literacymaterials but no spillovers to the provision of discountvouchers on farmersdecision to purchase insurance.Specifically, receiving financial literacy materials when60% or more of their neighbors also receive financialliteracy materials, increases the likelihood that a farmerwill purchase insurance by 4.3 percent (s.e. 2.5 percent)while receiving a financial literacy materials when 40percent or fewer of their neighbors also receive financialliteracy materials, decreases the likelihood that a farmerwill purchase insurance by 2.6 percent (s.e. 2.5 percent).Looking at the discount vouchers, we find significant owneffects of receiving discounts off the price of insurance onfarmerstake-up decision but negligible social networkeffects. Our results provide suggestive evidence thatfinancial literacy materials are efficacious in encouragingtake-up when farmerssocial contacts are similarly receiveaccess to financial literacy materials.
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