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Modeling Farm‐Level Crop Insurance Demand with Panel Data
Author(s) -
Coble Keith H.,
Knight Thomas O.,
Pope Rulon D.,
Williams Jeffery R.
Publication year - 1996
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243715
Subject(s) - crop insurance , econometrics , economics , panel data , probit model , adverse selection , negative binomial distribution , generalized method of moments , actuarial science , agricultural economics , statistics , agriculture , mathematics , geography , archaeology , poisson distribution
A random‐effects, binomial probit model is applied to data for a panel of Kansas wheat farms to examine Multiple Peril Crop Insurance demand. A theoretical model is developed which suggests inclusion of the moments of both market return and the return to insurance. Empirical results indicate that the first and second moments of both market return and the returns to insurance are significant. The price elasticity of demand is estimated to be −0.65. Preseason weather variables when included in the models were not found to be significant, failing to support the hypothesis of intertemporal adverse selection.