IDEAS home Printed from https://ideas.repec.org/a/eee/jpolmo/v48y2026i1p241-254.html

Producer heterogeneity, insurance decisions and economic impacts of crop insurance

Author

Listed:
  • Mavroutsikos, Charalampos
  • Giannakas, Konstantinos
  • Walters, Cory

Abstract

This paper introduces the empirically relevant heterogeneity/differences in producer attitudes towards risk into the analysis of the economic impacts of crop insurance. Analytical results show that individual producer risk attitudes matter. Specifically, our study shows that the producer insurance decisions, the market shares of the different insurance options, and the welfare impacts of crop insurance are very much dependent on the producer aversion to risk as well as the risk exposure faced by producers, the reduction in this risk exposure offered by crop insurance, and the crop insurance premiums. Understanding the producer response to different crop insurance options is important for the formulation of policies that align with diverse risk profiles. Our analysis indicates that maintaining the status quo will further exacerbate regional differences in the economic impacts of crop insurance. Our analysis suggests that crop insurance policy design should consider a customized approach through a variable premium subsidy scheme to effectively address regional disparities in risk exposure and insurance coverage.

Suggested Citation

  • Mavroutsikos, Charalampos & Giannakas, Konstantinos & Walters, Cory, 2026. "Producer heterogeneity, insurance decisions and economic impacts of crop insurance," Journal of Policy Modeling, Elsevier, vol. 48(1), pages 241-254.
    • Handle: RePEc:eee:jpolmo:v:48:y:2026:i:1:p:241-254
    DOI: 10.1016/j.jpolmod.2025.10.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0161893825001206
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpolmod.2025.10.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Taro Mieno & Cory G Walters & Lilyan E Fulginiti, 2018. "Input Use under Crop Insurance: The Role of Actual Production History," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1469-1485.
    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 Economic Reports 34081, United States Department of Agriculture, Economic Research Service.
    3. Jisang Yu & Aaron Smith & Daniel A Sumner, 2018. "Effects of Crop Insurance Premium Subsidies on Crop Acreage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(1), pages 91-114.
    4. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 121-133, July.
    5. Connor, Lawson & Katchova, Ani L., 2020. "Crop Insurance Participation Rates and Asymmetric Effects on U.S. Corn and Soybean Yield Risk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 45(01), January.
    6. Jerry Hausman, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    7. Charalampos Mavroutsikos & Konstantinos Giannakas & Cory Walters, 2021. "The role of premium subsidies in crop insurance," PLOS ONE, Public Library of Science, vol. 16(4), pages 1-15, April.
    8. Joost M.E. Pennings & Raymond M. Leuthold, 2000. "The Role of Farmers' Behavioral Attitudes and Heterogeneity in Futures Contracts Usage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 908-919.
    9. Azzam, Azzeddine & Walters, Cory & Kaus, Taylor, 2021. "Does subsidized crop insurance affect farm industry structure? Lessons from the U.S," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1167-1180.
    10. ., 2023. "Managing prices: price cutting strategies," Chapters, in: Fixing Prices, chapter 3, pages 81-109, Edward Elgar Publishing.
    11. Luisa Menapace & Gregory Colson & Roberta Raffaelli, 2013. "Risk Aversion, Subjective Beliefs, and Farmer Risk Management Strategies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 384-389.
    12. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rocha, Jr., Adauto B. & Fulginiti, Lilyan E. & Perrin, Richard K. & Walters, Cory G., 2022. "What is the value of crop insurance for Nebraskan farmers?," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322529, Agricultural and Applied Economics Association.
    2. KOUAKOU, Dorgyles C.M. & SZEGO, Eva, 2024. "Evaluating the integration of artificial intelligence technologies in defense activities and the effect of national innovation system performance on its enhancement," MPRA Paper 120617, University Library of Munich, Germany.
    3. Tarlok Singh, 2022. "Economic growth and the state of poverty in India: sectoral and provincial perspectives," Economic Change and Restructuring, Springer, vol. 55(3), pages 1251-1302, August.
    4. Bluhm, Richard & de Crombrugghe, Denis & Szirmai, Adam, 2018. "Poverty accounting," European Economic Review, Elsevier, vol. 104(C), pages 237-255.
    5. Gasmi,Farid & Kouakou,Dorgyles Christ Maurel & Noumba Um,Paul & Milla,Pedro Rojas, 2023. "An Empirical Analysis of the Social Contract in the Middle East and North Africa : Regionand the Role of Digitalization in Its Transformation," Policy Research Working Paper Series 10455, The World Bank.
    6. Gasmi, Farid & Kouakou, Dorgyles & Noumba Um, Paul & Rojas Milla, Pedro, 2023. "An empirical analysis of the social contract in the MENA region and the role of digitalization in its transformation," TSE Working Papers 23-1423, Toulouse School of Economics (TSE).
    7. Richard Bluhm & Denis de Crombrugghe & Adam Szirmai, 2016. "Poverty Accounting. A fractional response approach to poverty decomposition," Working Papers 413, ECINEQ, Society for the Study of Economic Inequality.
    8. Alessandro Barattieri & Matteo Cacciatore, 2023. "Self-Harming Trade Policy? Protectionism and Production Networks," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 97-128, April.
    9. Meyer, Ina & Kaniovski, Serguei & Scheffran, Jürgen, 2012. "Scenarios for regional passenger car fleets and their CO2 emissions," Energy Policy, Elsevier, vol. 41(C), pages 66-74.
    10. Nicole M. Mason & Thomas S. Jayne & Nicolas van de Walle, 2017. "The Political Economy of Fertilizer Subsidy Programs in Africa: Evidence from Zambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(3), pages 705-731.
    11. Amat Adarov & Robert Stehrer, 2020. "Capital dynamics, global value chains, competitiveness and barriers to FDI and capital accumulation in the EU," JRC Research Reports JRC121096, Joint Research Centre.
    12. Shahin Bahrami & Mani Rouhi Rad & Rodolfo M. Nayga, 2026. "Dollars for Drops: Abatement Cost of Water for Irrigation in the Colorado River Basin," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 48(1), pages 278-293, March.
    13. Céline Nauges, 2018. "Correction to: Water Hauling and Girls’ School Attendance: Some New Evidence from Ghana," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(2), pages 447-447, February.
    14. Øien Henning, 2013. "Do Local Governments Respond to (Perverse) Financial Incentives in Long-Term Care Funding Schemes?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 525-549, August.
    15. Leila Bengali & Mary C. Daly & Olivia Lofton & Robert G. Valletta, 2021. "The Economic Status of People with Disabilities and Their Families since the Great Recession," The ANNALS of the American Academy of Political and Social Science, , vol. 695(1), pages 123-142, May.
    16. Guccio, C. & Lisi, D., 2014. "Social interactions in inappropriate behavior for childbirth services: Theory and evidence from the Italian hospital sector," Health, Econometrics and Data Group (HEDG) Working Papers 14/28, HEDG, c/o Department of Economics, University of York.
    17. Bendig, David & Schulz, Colin & Möhwald, Maximilian & Pollok, Patrick, 2025. "Fear the loss or welcome the gains? How stock options influence CEO risk-taking in corporate cleantech investments," Journal of Business Venturing, Elsevier, vol. 40(2).
    18. Nicholas Sly & Caroline Weber, 2015. "Global tax policy and the synchronization of business cycles," Research Working Paper RWP 15-7, Federal Reserve Bank of Kansas City.
    19. Mingyu Hu & Fujin Yi & Hong Zhou & Feier Yan, 2024. "The More the Better? Reconsidering the Welfare Effect of Crop Insurance Premium Subsidy," Agriculture, MDPI, vol. 14(11), pages 1-19, November.
    20. Baccini, Leonardo & Impullitti, Giammario & Malesky, Edmund J., 2019. "Globalization and state capitalism: Assessing Vietnam's accession to the WTO," Journal of International Economics, Elsevier, vol. 119(C), pages 75-92.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jpolmo:v:48:y:2026:i:1:p:241-254. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505735 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.