Chair of Development Economics
Formal Insurance and Productive Effects Study (FIdES)

Formal Insurance and Productive Effects Study (FIdES)


Formal Insurance and Productive Effects Study

Health problems are a serious threat for most households in developing countries (see e.g. Wagstaff, 2007; Wagstaff and Doorslaer, 2003; De Weerdt and Dercon, 2006; Grimm et al., 2015). Treatment often requires forgoing expenditures for other basic necessities including food, depleting assets or withdrawing children from school (Dercon, 2002). Untreated health problems in turn can significantly reduce the capacity to generate income in the future. Further inefficiencies arise because households build up precautionary savings, often in assets that are less productive but easy to liquidate to smooth consumption if such shocks arise. In consequence there are little to no resources left for investment in more risky but also more productive assets and activities. Policy has recognized this problem and many developing countries have either started or are at least thinking about introducing health insurance (e.g. Ethiopia, Ghana and Rwanda). However, there is not yet a consensus on the best way of doing it (see e.g. Lagomarsino et al., 2012). Countries experiment with private, public and community based schemes to see how a viable and effective system with wide if not universal coverage can be build up.

The purpose of the Formal Insurance & Productive Effects Study (FIdES) is to analyze the direct effects of community based health insurance (CBHI) on health care utilization and health, as well as, the indirect effects of such insurance on transfer networks, investment in productive farm and non-farm capital in Burkina Faso. The data collected within FIdES shows that in Burkina Faso health shocks are actually the most important risk to households; over half of all reported shocks are health shocks, other shocks like droughts only play a minor role (Grimm et al., 2015). An innovation of the project is that it also allows assessing the effects of insurance on the beneficiaries’ traditional risk sharing networks. In the context at hand relatives in urban areas, often owners of small firms, provide most of the financial resources needed by rural households to cope with shocks, in particular health shocks. Several recent papers suggest that sharing obligations are an important obstacle to the establishment and growth of micro and small enterprises (Hoff and Sen, 2006; Baland et al., 2011; Jakiela and Ozier, 2012; Grimm et al., 2017). A related question is then whether in turn the introduction of formal insurance can enhance investment and employment generation in such enterprises as incentives are altered and more resources become available potentially.

So far, little is known about how the introduction of formal insurance affects the traditional risk sharing network and in turn other economic outcomes, such as enterprise investment. Moreover, so far, empirical studies, either look at the effects of formal insurance on transfers (see e.g. Karlijn, 2015) or on investment (see e.g. Cai, 2013; Karlan et al., 2014; McKenzie and Groh, 2014). To our knowledge, the results from this project will constitute the first causal evidence on the relationship between insurance of health risks and productive investment.

Research Question

Precisely FIdES aims to address the following four research questions:

a)    What determines uptake of CBHI and how can uptake be enhanced and sustained? 
b)    What are the impacts of the insurance on health care utilization and health? 
c)    What are the effects of the insurance on investment in productive farm and non-farm capital? 
d)    How does access to health insurance alter traditional risk sharing and investment of urban households providing transfers?

Country Context & Policy Relevance

Burkina Faso is currently considering the implementation of a national health insurance scheme and is heavily promoting the creation and expansion of CBHI as basis for a national scheme to evolve. Nationwide information campaigns sensitizing the population on the importance of health insurance have started as early as 2013. The project thus aims to provide further and complementary evidence on the potential impact of such an intervention. Taking into account the potential indirect effects of health insurance on productive investment, which we are considering here, could have a sizeable effect on the cost and benefit analyses of health insurance and thus significantly alter policy decisions.

The Insurance and Infrastructure

The CBHI has been introduced in the rural community of Ziniaré (40km Northeast of Ouagadougou) in July 2014. It covers basic health care provided at the local health centers (CSPS) (consultations, minor surgeries, laboratory tests, deliveries and a range of generic drugs) and select services at the district hospital (CMA). The enrolment in the CBHI is at the household level. The annual subscription costs have been in the beginning 2,400 FCFA per person (about USD 8 PPP) and have been slightly increased later on. The health infrastructure in the area is satisfactory. For the 48 villages in the community there are 44 local health centers (CSPS), i.e. almost one health centre per village and a district hospital (CMA) in the city of Zinaré.

Project Partners

The project is conducted in cooperation with the Institut de Recherche en Sciences de Santé (IRSS) in Burkina Faso and the German Development Institute (GDI). The IRSS is one of four technical divisions of the Centre Nationale de la Recherche Scientifique et Technologique (CNRST) and the leading research institution on public health issues in Burkina Faso. The health insurance intervention under scrutiny in this project is being implemented by a local non-for-profit institution, Asmade (L’association Songui Manégré / Aide au Développement Endogène). Asmade is supported by the Burkinabè Government, the World Bank and a Belgian NGO (Solsoc) among others. The institution has substantial experience with the provision of insurance and other social services in Burkina Faso.

Study Set-up

Since uptake of the scheme is voluntary any evaluation of the scheme will have to deal with potential selection effects which may confound any assessment of impacts associated with the scheme. Hence, to introduce some randomness in insurance uptake we decided to implement a randomized encouragement design. The encouragement consisted of giving a random sample of households more information about the insurance than others. If this treatment is effective, i.e. indeed increases uptake it can serve as an instrument for actual uptake and allows to identify local average treatment effects (LATE) of insurance on the various outcomes mentioned above. The LATE is obviously driven by the compliers, but this is an interesting group from the view of the policy maker as these are the ones that are actually affected by the encouragement and in cases where a policy intervention is not compulsory; this is precisely the mechanism through which adhesion could then be reached.

Our encouragement consisted of three subsequent interventions. First, randomly selected households received a brochure; second they were shown a video at home; and third, they received a phone call reminding them to subscribe. The encouragement started in mid-December 2014 and was completed in March 2015. The three interventions were conducted with a gap of four to six weeks.

The brochure intended to explain the basic functioning of the health insurance using mainly illustrations since literacy levels in the area are very low (80% of household heads cannot read and write). The brochures were distributed by trained agents of Asmade.

The video was produced by the researchers in collaboration with Asmade. The core of the video is to illustrate the advantages of having health insurance. Whereas the brochure was mainly intended to provide factual information about the insurance, the video tries to put the observer in the hypothetical situation of being ill under the two alternative scenarios with and without protection.

Finally the selected households received a personalized phone reminding of subscribing to the insurance.

At each visit and after the phone call, the agents administered also a short questionnaire to the selected household recording the intention to take up the insurance and, if applicable, the reasons for no interest.

 The analysis of the impact of the information package on the knowledge on insurance principles and insurance uptake is of course interesting in its own right and is analyzed in detail in this project.


Of 1,499 rural households interviewed at baseline in 2013, 750 households were randomly selected to receive the encouragement. The randomization took place at the household level, so that in each of the 28 villages some sampled households were treated and others not. We conducted an additional survey in December 2014 in 12 villages (508 HH). In addition to the non-treated households in the encouragement villages, these villages serve as additional control where no encouragement information was distributed. We have thus three types of households treated households, control households in villages with treated households and control households in villages without treated households. However, in all villages the insurance is offered. The fact that we have two types of control households allows analyzing also treatment spill-overs, i.e. to see if an encouragement of the type implemented in this study can generate effects also on households that were not directly approached. Balancing tests show that treatment and control groups share the same characteristics and are thus fully comparable.

 Because of the crisis through which Burkina Faso went from 2014 to 2016 the uptake of the CBHI has been very low. Hence, in 2017 the initial encouragement was complemented by vouchers for a one-year trial period randomly given to 110 households among the 750 beneficiaries of the initial information package. Within these 110 households up to eight members can be insured for free for one year.

Data Collection

In view of an impact evaluation of that insurance, we undertook a pre-intervention (or baseline) survey among about 2,000 households in the intervention area (rural sample hereafter). 1,499 were interviewed in October/November 2013 and an additional 508 households in early December 2014, i.e. just when the scheme started to be offered to households. At this time subscription to the scheme was still low. Most households start enrolment in the post-harvest season at the beginning of the new year. 

The used questionnaire is structured around 13 modules covering detailed information on household and housing characteristics, consumption, agriculture and other economic activities, income and expenditures, health problems and access to services, shocks and  coping strategies used. The questionnaire further includes information on risk, the insurance concept, private transfers (sent and received) and their motives, as well as, the network links of these households and participation in village level organisations. The rural household survey is further complemented by a village and health centre survey mapping out the access to infrastructure and services.

Based on the transfer and network information provided by the rural households, we randomly sampled urban households linked to the rural households through transfer relationships and interviewed these as well (most of them in Ouagadougou – the capital – and Bobo Dioulasso – the country’s second city). The majority of the urban households sampled are running small enterprises (often self-employed). The urban household survey is structured around 17 modules and analog to the rural survey collects detailed information on household and housing characteristics, income and expenditures, health problems, the insurance concept, shocks and coping, transfers sent and received,  and risk. Furthermore the urban survey also includes detailed information on social norms, altruism, and enterprise characteristics (capital, credit, start-up activities and support, employees, turnover, profit and investment). Urban households have no access to the health insurance scheme.


The initiation of the project, including a feasibility study and a stakeholder workshop as well as the collection of the baseline data and the implementation of the randomized encouragement were financed with funding from the following institutions:

  • The Rotterdam Global Health Initiative (RGHI)
  • The German Development Institute (GDI)
  • The State of Bavaria (BayFor)
  • The University of Passau
  • The F.R.S. FNRS in Brussels

Project Outputs

  • Policy Briefs

    • Bonfrer, I., Gehrke, E. Grimm, M., R. Hartwig S. Kouanda, M. Loewe, and F. Yaya Bocoum (2014) Demand for Community-Based Health Insurance in Rural Burkina Faso. FIdES Policy Brief #1 University of Passau/IRSS Ouagadougou.
    • Bonfrer, I., Gehrke, E. Grimm, M., R. Hartwig S. Kouanda, M. Loewe, and F. Yaya Bocoum (2014) Expanding health insurance to the informal sector. FIdES Policy Brief #2, University of Passau/IRSS Ouagadougou.

  • Research Papers

  • Reports

    • Bocoum, F., M. Grimm, R. Hartwig and S. Kouanda (2014), Formal Insurance and Productive Effects Study - Rapport de l'Enquete de Base (Baseline Report), University of Passau.

  • TV Documentary

    • FIdES was featured by ARTE and the Bayersiche Rundfunk in the German and French Television. A film team had accompanied the researchers in July 2014 to Burkina Faso to make a documentary ("Der Glanz der Schattenwirtschaft" / "Les fabuleux bénéfices du Système D") about the project and related issues.


Baland, J.-M., C. Guirkinger and C. Mali (2011), Pretending to be Poor: Borrowing to Escape Forced Solidarity in Cameroon, Economic Development and Cultural Change, 60(1): 1-16.

Cai, J. (2013), The Impact of Insurance Provision on Households’ Production and Financial Decisions, Mimeo, University of Michigan.

De Weerdt, J., and S. Dercon (2006), Risk sharing networks and insurance against illness. Journal of Development Economics, 81(2): 337–356.

Dercon, S. (2002), Income risks, coping strategies and safety nets. World Bank Research Observer, 7 (2): 141-166.

Grimm, M., R. Hartwig and F. Yaya Bocoum (2015), Health Shocks and Coping Strategies among Rural Households in Burkina Faso, Paper to be presented at the Annual conference of the International Health Economics Association, Turin, June 2015.

Grimm, M., R. Hartwig and J. Lay (2017), Does forced solidarity hamper investment in small and micro enterprises? Forthcoming in the Journal of Comparative Economics, 45 (4): 827-846.

Hoff, K. and A. Sen (2006), The Kin System as a Poverty Trap? In: Poverty Traps, S. Bowles, S.N. Durlauf and K. Hoff (eds.). New York: Princeton University Press.

Jakiela, P. and O. Ozier (2012), Does Africa Need a Rotten Kin Theorem. Experimental evidence from Village Economies, Policy Research Working Paper 6085, The World Bank, Washington D.C.

Karlan, D., Osei, R. D., Osei-Akoto, I., and C. Udry (2012), Agricultural decisions after relaxing credit and risk constraints. Quarterly Journal of Economics, 129 (2): 597-652.

Lagomarsino, G., A. Garabrant, A. Dayas, R. Muga and N. Otoo (2012), Moving towards universal health coverage: health insurance reforms in nine developing countries in Africa and Asia, Lancet, 380: 933-943.

McKenzie, D. and M. Groh (2014), Macroinsurance for Microenterprises: A Randomized Experiment in Post-Revolution Egypt. CEPR Discussion Paper No. DP10226.

Morsink, K. (2015), The effect of formal insurance on transfer motives in informal risk-sharing groups. Mimeo, University of Oxford.

Wagstaff, A. (2007). Economic Consequences of Health Shocks: Evidence from Vietnam. Journal of Health Economics, 26(1): 82-100.

Wagstaff, A ., and E. van Doorslaer(2003). Catastrophe and impoverishment in paying for health care: with applications to Vietnam 1993–1998. Health Economics, 12(11): 921-933.

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