Risk Sharing and Mobile Phones: Evidence in the Aftermath of Natural Disasters∗

We provide empirical evidence that Rwandans use the mobile phone network to transfer airtime to those affected by unexpected shocks. Using an extensive dataset on mobile phone activity in Rwanda and exploiting the quasi-random timing and location of natural disasters, we show that individuals make transfers and calls to people affected by disasters. The magnitude of these transfers is small in absolute terms, but statistically significant; in response to the Lake Kivu earthquake of 2008, we estimate that roughly US$84 in airtime was transferred to individuals in the affected region, and that US$16,959 was spent calling those near the epicenter. Unlike other documented forms of risk sharing, airtime transfers are sent over large geographic distances and in response to covariate shocks. Transfers are more likely to be sent to wealthy individuals, and are sent predominantly between pairs of individuals with a strong history of reciprocal exchange. JEL Classification: O17, H84, O16, O33