Economic Analysis of Social Networks: Empirical Study on Selected Women Iddir in Addis Ababa

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Date

2000-06

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Publisher

A.A.U

Abstract

By describing and singling out the economic features of Women Iddir, the study attempts to review and associate the literature on in formal insurance and social capital. It provides a framework of theoretical analysis and empirical results based on descriptive as well as econometric methods. The study brought out the uninterrupted social welfare service of Women Iddir that existed for about 60 years. Besides demonstrating its effective informal insurance service in Ethiopia, it reveals that age, education, premium and economic rational significantly explain the demand for funeral cover. Financial capacity and social rational influence efficiency of networks positively while reciprocity and membership to other forms of networks induce negative effect. Results indicate the existence of certain optimal level of informal insurance purchase by a risk averse person. It is found reasonable to discern that certain level of explicit and implicit economic rationale exist behind Women lddir that mostly are considered as altruistic, traditional, humanitarian, welfare, etc. Although networks are incepted in social and moral contexts, their resource base, welfare services and functions provide adequate justification to consider them as economic institution. Their informal nature and sustained service is the result of using mixed (non pure) strategies based on best alternatives, which are partial contract, partial economic rational and with strong reciprocal exchange and social objective. The exposure to non-home activities and recognition of wide range of risks enabled women to broaden the informal insurance cover. The non-marketable and efficient service offered by Women Tddir makes the potential of its substitutability far reaching. Instead, it has developed great potential to diversify the social welfare services if technical, material and financial backing is availed for them to develop and assume larger societal responsibilities. In spite of their own institutional development, recognition of Women Tddir's informal insurance/social welfare services deserves accounting their economic role in the society. Thus, studies on consumption and expenditure need to account their role in the households' economy and provide information for planning.

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Keywords

Social Networks, Selected Women Iddir

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