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Econometric identification of crop insurance participation

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  • Tsiboe, Francis
  • Turner, Dylan

Abstract

This paper shows how econometric identification can be improved in studies making use of crop insurance participation as either an independent or dependent variable. The paper provides the reader with a succinct overview of how crop insurance contracts are priced and how to use publicly available data to derive a novel composite crop insurance design parameter that emulates existing crop insurance rating parameters using a procedure that is based on current actuarial practices. The derived design parameter performs well at predicting historic crop insurance loss-cost ratios and satisfies the requirements for an instrumental variable for a variety of empirical applications related to crop insurance. Representative empirical examples are presented where it is shown that the proposed instrument has favorable two-staged least squares diagnostic tests and is effective at eliminating endogeneity bias.

Suggested Citation

  • Tsiboe, Francis & Turner, Dylan, 2023. "Econometric identification of crop insurance participation," Agricultural and Resource Economics Review, Cambridge University Press, vol. 52(3), pages 476-497, December.
    • Handle: RePEc:cup:agrerw:v:52:y:2023:i:3:p:476-497_2
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    Cited by:

    1. Amare Wodaju & Zerihun Nigussie & Asresu Yitayew & Bosena Tegegne & Atalel Wubalem & Steffen Abele, 2025. "Factors influencing farmers’ willingness to pay for weather-indexed crop insurance policies in rural Ethiopia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(4), pages 8951-8976, April.
    2. Nusrat Akber & Kirtti Ranjan Paltasingh & Ashok K. Mishra, 2025. "Does crop insurance ensure food security for Indian farmers? Evidence from a nationally representative survey," Agribusiness, John Wiley & Sons, Ltd., vol. 41(1), pages 217-237, January.

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