Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Article

Publication Version

Published Version

Publication Date

4-2008

Journal or Book Title

Journal of Agricultural and Resource Economics

Volume

33

Issue

1

First Page or Article ID Number

52

Last Page

68

Abstract

Effects of sampling error in estimation of farmers' mean yields for crop insurance purposes and their implications for actuarial soundness are explored using farm- level corn yield data in Iowa. Results indicate that sampling error, combined with nonlinearities in the indemnity function, leads to empirically estimated insurance rates that exceed actuarially fair values. The difference depends on the coverage level, the number of observations used, and the participation strategy followed by farmers. A new estimator for mean yields based on the decomposition of farm yields into systemic and idiosyncratic components is proposed, which could lead to improved rate-making and reduce adverse s

Comments

This is an article from Journal of Agricultural and Resource Economics, 33(1) April 2008, 52-68. Posted with permission.

Copyright Owner

Western Agricultural Economics Association

Language

en

File Format

application/pdf