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On the Impact of Agricultural Livestock Microinsurance on Death-Loss, Production and Vaccine Use: Observations from a Quasi-Natural Experiment in China

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  • Yuehua Zhang

    (Public Administration College, Zhejiang University, Zhejiang 310027, China)

  • Xi Zhu

    (Antai College of Economics & Management, Shanghai Jiao Tong University, 1954 Huashan Road, Shanghai 200030, China.)

  • Calum G Turvey

    (Charles H. Dyson School of Applied Economics and Management, Cornell University, Ithaca, NY 14853-7801, U.S.A)

Abstract

Moral hazard remains a major concern in microinsurance markets in most developing countries. However, it is hard to find good measures and control individual heterogeneity to make reliable tests. We address these problems by taking advantage of a natural experiment due to an insurance company’s policy change in Deqing County China in 2009 and 2010. We investigate the effect of pig insurance on death loss, production and vaccine use based on a detailed household survey. Difference-in-differences and propensity score-matching estimators show that insurance’s effect on mortality and vaccine use is not significant for both hogs and sows. Thus, there is no evidence of moral hazard. However, the insurance does have a positive impact on hog production, but not for sows. These results show that moral hazard problems should not be the main barrier to developing the livestock microinsurance market.

Suggested Citation

  • Yuehua Zhang & Xi Zhu & Calum G Turvey, 2016. "On the Impact of Agricultural Livestock Microinsurance on Death-Loss, Production and Vaccine Use: Observations from a Quasi-Natural Experiment in China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(2), pages 225-243, April.
    • Handle: RePEc:pal:gpprii:v:41:y:2016:i:2:p:225-243
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    Citations

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    Cited by:

    1. Xudong Rao & Yuehua Zhang, 2020. "Livestock insurance, moral hazard, and farmers’ decisions: a field experiment among hog farms in China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 134-156, January.
    2. Rao, Xudong & Cai, Qingyin & Zhang, Yuehua, 2021. "Moral Hazard in Compulsory Insurance – Evidence from a Quasi-Experiment on Hog Insurance in China," 2021 Conference, August 17-31, 2021, Virtual 315356, International Association of Agricultural Economists.
    3. Qingyin Cai & Yulian Ding & Calum Tuvey & Yuehua Zhang, 2021. "The influence of past experience on farmers’ preferences for hog insurance products: a natural experiment and choice experiment in China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 399-421, July.
    4. Yugang Ding & Cheng Sun, 2022. "Does agricultural insurance promote primary industry production? Evidence from a quasi-experiment in China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(2), pages 434-459, April.

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