Profits To Bonus Employees

By Maria Reyes

According to a study by Christopher Udry, this form of informal insurance has both advantages and disadvantages. Over a year in rural Nigeria, Udry asked people to record every gift or informal loan they gave to each other and the conditions under which those loans were reciprocated.[214]Every month, he also asked if anything unfortunate had hap

• Language: English
• Publisher: Maria Reyes
• Release date: Oct 3, 2023
• ISBN: 9798868953958

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Profits To Bonus Employees

Profits To Bonus Employees

Copyright © 2023 by Maria Reyes

All rights reserved

TABLE OF CONTENTS

CHAPTER 1 : HELP EACH OTHER IN TIMES OF TROUBLE

CHAPTER 2 : SO DO ALL THE OTHER HIGH-YIELD COMPANIES.

CHAPTER 3 : WHAT IS AN EXAMPLE?

CHAPTER 4 : NETWORK OF RELATIONSHIPS

CHAPTER 5 : HOW TO MANAGE CHALLENGING BEHAVIOR TYPES

CHAPTER 1 : HELP EACH OTHER IN TIMES OF TROUBLE

Another more effective way of confronting risks is for villagers to help each other. The poor mostly live concentrated in villages or surrounding areas, and are linked into extensive networks of extended family relatives, religious community groups or ethnic groups. Although there are risks that affect the entire network (such as floods), most often only affect a certain area. If people in favorable circumstances extend a helping hand to those in difficulty so that they can be helped in return when encountering similar problems, everyone can have a more prosperous life: Helping each other does not necessarily mean giving alms at first. thank each other.

According to a study by Christopher Udry, this form of informal insurance has both advantages and disadvantages. Over a year in rural Nigeria, Udry asked people to record every gift or informal loan they gave to each other and the conditions under which those loans were reciprocated.[214]Every month, he also asked if anything unfortunate had happened to the villagers. The observed result is that at any given time, a normal family is in debt or loans to 2.5 other families. And loan repayment conditions are tailored to the specific circumstances of the borrower and the lender. When the borrower has problems, he can repay less (usually less than the original value of the loan) but if the lender has problems, the borrower usually repays more than he paid. I owe. This dense social network of reciprocal borrowing and lending relationships is extremely effective in minimizing risk for each individual. However, there are still many limitations in this informal dependence relationship. Families still suffer from reduced income when things happen, even though the total income of everyone in the network combined remains unchanged.

There have been many studies conducted from Côte d'Ivoire to Thailand on informal insurance. Most pointed out that while traditional insurance networks help reduce shock, their effectiveness is very limited. Because if risks are well insured, a family's spending level must always fluctuate stably around the average income they can earn: Help others when you are well off and be helped by others when you are in trouble. unfortunate thing. But in reality we observe that this is not the case.

Insurance coverage for health incidents is particularly poor. In Indonesia, consumption drops by 20% when a family member becomes seriously ill.[215]As documented by a study in the Philippines, informal support is weak if not deadly.[216]When a family's crop fails or someone loses their job, people in the village will gather to help. Families in need will be given this or that, interest-free loans and many other forms of support. But when someone suddenly falls ill, no one reaches out to help. Only that family is left to cope with difficulties on their own.

It is truly surprising because people are still willing to help each other in many other situations. In the previous chapter, we mentioned the case of Ibu Emptat, a woman we met in a small village in Java. Her husband had vision problems and her child had to drop out of school because she couldn't afford the medicine to treat his asthma. Ibu Emptat borrowed 100,000 rupees (equivalent to 18.75 US dollars) from a loan shark to treat her husband's eyes. When we met, this debt including interest had increased to one million rupees. She is worried because the loan shark is threatening to take all the family's assets. However, during the interview we learned that her daughter had just given her a TV. Her daughter just bought a new TV for about 800,000 rupees (equivalent to 150 US dollars), so she decided to give the old TV (but still working well) to her parents. We were a bit surprised: Her daughter should have continued to use the old TV and given the money to buy a new TV to her parents to pay off the debt. When asked, Don't children help pay off debt?, Ibu Emptat just shook his head and replied that children have their own concerns, their own families to take care of - implicitly implying that there should be no demands. must be given this or that. Perhaps she thought it was not unusual for her to have no one to help her pay for her medicine.

What stops us from making more efforts to help others? Why are there risks that are not insured, or are insured very poorly?

There are many good reasons why it is difficult for us to be willing to help our friends and neighbors unselfishly. On the one hand, we are afraid that helping will make people lazy and dependent, this is called moral hazard in insurance terms. Or maybe we're afraid that people will ask for help even when we're not having trouble. Or maybe it's because there's nothing certain about the promise to help each other in times of trouble: I help you, but when you're in trouble, you don't remember me.

The reasons above explain why we often hold back when helping others, but they do not explain why no one reaches out to help when others are sick, because clearly no one wants to be sick. Most economists believe that the basis of informal insurance is: we help others because we may need their kindness in the future. However, things are not necessarily like that. We will still help our neighbors in difficult times without expecting to fall into the same situation. For example, it would be inhumane to just let our neighbors starve. In this book about rural life in mid-1970s Bangladesh[217], two authors Betsey Hartley and Jim Boyce describe the story between a Hindu family and a Muslim family living next to each other and not very close to each other. The Hindu family unfortunately lost the main worker in the house and fell into hunger; Too broke, the woman in the family sometimes sneaked into the next door's garden to steal vegetables. According to Hartman, the Muslim family knew about it but turned a blind eye. This family shared: I know she is not mean. If I were in her situation, I would probably steal too. Whenever I lose random things, I try not to get upset. I thought, 'The thief must be hungrier than me.'

People help each other overcome difficulties because of their conscience, not necessarily because they expect something in return. This explains why informal networks are not very useful in the face of a health incident. When poor people have enough to eat and see their neighbors starving, it is common for good leaves to cover torn leaves. But helping others pay hospital bills is not simply a simple act of sharing: Sometimes many households have to pool money because treatment is often very expensive. Therefore, it is not difficult to understand if people ignore their neighbors when they are sick without any conscience. It is necessary to have closer social relationships to be able to extend a helping hand in these situations.

The view that informal insurance is primarily driven by moral obligation explains why people in Nigeria help each other from an individual perspective rather than contributing to a common fund, despite sharing risks. By joining hands it will be much more effective. This view explains why Mrs. Ibu Emptat's daughter gave her mother a TV instead of helping shoulder the medical expenses. She doesn't want to be the only one responsible for taking care of her parents (and she also doesn't want to seem like she's better-natured than her siblings). So she decided to do something kind without going beyond the scope of her responsibilities.

WHERE IS THE INSURANCE COMPANY FOR THE POOR?

Given the fact that the lives of the poor are always full of risks and that insurance from the informal support network is so limited, all of us must wonder why the poor do not have more access to insurance. Official insurance, the type provided by insurance companies. Formal insurance of any type is narrow for the poor. Health insurance, weather insurance and livestock insurance, while standard products for farmers in rich countries, are almost absent in developing countries.

Nowadays, when microcredit is no longer strange to the people, insurance for the poor has become a fertile land of opportunities for capitalists with sharp and creative business minds (a commentary). Forbes magazine called this the untapped natural market).[218]Poor people face countless risks and would be willing to pay a moderate insurance premium to insure their life, health, livestock or crops. With billions of poor people needing to buy insurance, even though each insurance program only earns a very modest profit, this is still an insurance field that promises huge profits. And the poor will of course benefit greatly from that. The only shortcoming is that no one has stepped up to establish order for this market. That urgent need has prompted international organizations (such as the World Bank) and major foundations (such as the Gates Foundation) to invest hundreds of millions of dollars to further expand the options available. Choose insurance for the poor.

Obviously there are always some difficulties when providing insurance services. These difficulties are not unique to the poor but are fundamental problems that occur everywhere. It's just that the level is more severe in poor countries, where it's both difficult to control insurance companies and difficult to track the insured. We have already mentioned moral hazard: People tend to change their behavior (be more careless when calculating crops, spend more money on medical examination and treatment, etc.) if they know they are not take full responsibility. Consider the health insurance industry. We have seen that even without health insurance, poor people still go to the doctor very often. What if medical examination and treatment became free? Clearly, doctors also have an additional reason to prescribe unnecessary drugs and tests, especially if these doctors have their own dispensaries (which is very common in both the US and India) or are licensed by other pharmacies. anti-drug stores. It seems that every problem comes to the same conclusion: Patients want to see immediate effects, so they often prefer doctors who prescribe a lot of drugs, and doctors also make more money if they do so. In a country where health service management is still weak and anyone can open a clinic as a doctor, the application of health insurance reimbursement for outpatient medical examination and treatment is no different. stepping right to the edge of bankruptcy.

Another problem is adverse selection. If insurance is not mandatory, people who know they may encounter problems in the future will sign up more. There will be nothing to discuss if the insurance company is aware of this subject, because it is a factor that affects the insurance premium paid. But if the insurance company cannot determine who buys insurance to benefit immediately, they have no choice but to increase insurance premiums for everyone. However, high prices only make the situation worse because many customers, including those who do not need insurance immediately, will no longer be interested in insurance products, making the situation even more serious. This is why in the US it is very difficult to register for health insurance at a reasonable cost without going through a corporate agency. And this is also the reason why affordable health insurance programs are often mandatory - if everyone has to sign up, the insurance company doesn't have to cater exclusively to at-risk people. High.

The third problem is organized fraud: How do we prevent hospitals from reporting false numbers or asking patients to pay more for the health care they received? And in the case of a farmer buying insurance for his domestic buffalo, how can he prevent him from falsely reporting that it is dead? Nachiket Mor and Bindu Ananth of ICICI working in the Indian financial sector have spent a lot of time and effort to build better financial services for the poor. They detailed their first disastrous experiment with us, their voices laced with self-deprecating humor. Years ago they started trying to offer livestock insurance. After a series of false reports of dead livestock in order to receive insurance money in many places, they decided to change the policy, specifically, to claim insurance compensation for dead livestock, the owner must submit the animal's ears. cow is dead. This change sparked a boom in the market for buying and selling cow ears. Any cow, whether insured or not, has its ears cut off and sold to cattle insurance buyers. Thanks to that, both parties can both enjoy compensation insurance money and keep their livestock. In the summer of 2009, we attended a conference where Nandan Nilekani, founder and former CEO of Indian software giant Infosys, explained unique identifiers. For