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Journal of Agricultural and Resource Economics >
Volume 33, Number 1, April 2008 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/36707
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| Title: | Using a Farmer's Beta for Improved Estimation of Expected Yields |
| Authors: | Carriquiry, Miguel A.
Babcock, Bruce A.
Hart, Chad E. |
| Keywords: | actual production history (APH)
adverse selection
crop insurance
mean yields estimation
sampling error |
| Issue Date: | 2008-04 |
| 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 selection. |
| URI: | http://purl.umn.edu/36707 |
| Institution/Association: | Journal of Agricultural and Resource Economics>Volume 33, Number 01, April 2008 |
| Total Pages: | 17 |
| From Page: | 52 |
| To Page: | 68 |
| Collections: | Volume 33, Number 1, April 2008
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| 33010052.pdf | | 5753Kb | PDF | View/Open |
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