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Patterns of Collusion in the U.S. Crop Insurance Program: An Empirical Analysis

Author

Listed:
  • Rejesus, Roderick M.
  • Little, Bertis B.
  • Lovell, Ashley C.
  • Cross, Mike H.
  • Shucking, Michael

Abstract

This article analyzes anomalous patterns of agent, adjuster, and producer claim outcomes and determines the most likely pattern of collusion that is suggestive of fraud, waste, and abuse in the federal crop insurance program. Log-linear analysis of Poisson-distributed counts of anomalous entities is used to examine potential patterns of collusion. The most likely pattern of collusion present in the crop insurance program is where agents, adjusters, and producers nonrecursively interact with each other to coordinate their behavior. However, if a priori an intermediary is known to initiate and coordinate the collusion, a pattern where the producer acts as the intermediary is the most likely pattern of collusion evidenced in the data. These results have important implications for insurance program design and compliance.

Suggested Citation

  • Rejesus, Roderick M. & Little, Bertis B. & Lovell, Ashley C. & Cross, Mike H. & Shucking, Michael, 2004. "Patterns of Collusion in the U.S. Crop Insurance Program: An Empirical Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(02), August.
  • Handle: RePEc:ags:joaaec:43393
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    References listed on IDEAS

    as
    1. Alger, Ingela & Albert Ma, Ching-to, 2003. "Moral hazard, insurance, and some collusion," Journal of Economic Behavior & Organization, Elsevier, vol. 50(2), pages 225-247, February.
    2. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economics Reports 34081, United States Department of Agriculture, Economic Research Service.
    3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    4. Pierre Picard, 2012. "Economic Analysis of Insurance Fraud," Working Papers hal-00725561, HAL.
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    Cited by:

    1. Pierre Picard, 2012. "Economic Analysis of Insurance Fraud," Working Papers hal-00725561, HAL.

    More about this item

    Keywords

    abuse; collusion; crop insurance; empirical analysis; fraud; waste; G22; Q12; Q18; Q19;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q19 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Other

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