wherin a state s representative individual may choose to marry in order to diversify his or her idiosyncratic income risk … undiversifiable risk becomes larger, and when a state s initial income and growth rate is lower. A test of the model s predictions …, using cross-sectional data for the 50 U.S. states, suggests that there is broad support for a risk sharing motive for …

We measure the extent of consumption insurance to income shocks accounting for high-order moments of the income … distribution. We derive a nonlinear consumption function, in which the extent of insurance varies with the sign and magnitude of … income risk matters substantially for consumption …