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Development and freedom as risk management

Chowdhry, Bhagwan and Roll, Richard and Saxena, Konark (2013) Development and freedom as risk management. Finance Research Letters, 10 (3). pp. 103-109. ISSN 1544-6123. doi:10.1016/

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Amartya Sen has argued that many development and freedom measures such as health, education, political and civil liberties are important constituents of human welfare. We concur with Sen and conjecture that an important reason these measures affect human welfare is because they allow individuals to better cope with risk and uncertainty that cannot be hedged using market based insurance mechanisms. We find some empirical support for this conjecture in that the volatility of consumption growth appears to be negatively related to life expectancy, political rights, and property rights (but is positively related to the rate of literacy) after controlling for the size of the country, per capita income, and openness to trade and capital flows, (which, as one would expect, also reduce consumption growth volatility) in cross-country panel regressions.

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Additional Information:© 2013 Elsevier. Received 31 May 2012, Accepted 2 July 2013, Available online 11 July 2013. We thank the seminar participants of Brown-bag Finance seminar series at UCLA Anderson and an anonymous referee for many insightful comments. All errors are ours.
Subject Keywords:Insurance; Risk; Freedom; Development
Issue or Number:3
Classification Code:JEL classification: O15; O16; G22; G18
Record Number:CaltechAUTHORS:20190426-145910052
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Official Citation:Bhagwan Chowdhry, Richard Roll, Konark Saxena, Development and freedom as risk management, Finance Research Letters, Volume 10, Issue 3, 2013, Pages 103-109, ISSN 1544-6123, (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:95036
Deposited By: George Porter
Deposited On:29 Apr 2019 21:43
Last Modified:16 Nov 2021 17:09

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