Hog insurance adoption and suppliers' discrimination: A bivariate probit model with partial observability
Purpose – This paper explored factors that impact insurance choices of demand (farmers) and supply (insurance companies) side, respectively. Design/methodology/approach – Specially designed survey questions allow one to fully observe the demand tendency from farmers and partially observe the supply tendency from insurance companies. Using bi-vairate probit model, a joint estimation of insurance decisions of both supply and demand sides suggested that factors perform different roles in affecting insurance participation. Findings – Farmer's age and education have positive impacts on insurance demand, but are indifference to insurance providers. Insurance suppliers care about farmers' experience in the fields when providing insurance services, however, on the demand side, farmers' experience occasionally results in overconfidence and hence, impedes farmers' insurance purchasing. Production scales, proxy by sow inventory, are put more weight by farmers than insurance suppliers when making decisions. Production efficiency measures perform as incentives for farmers to purchase insurance. While suppliers prefer customers who use vaccine, farmers tend to treat vaccine as a substitute for insurance to prevent disease risk. Social implications – Results from bi-vairate probit model offer deeper understandings about livestock insurance choices and provide further insights to improve policy design and promote participation. Originality/value – The study designed a special questionnaire and firstly used bi-vairate probit model to offer more understandings about demand and supply sides of livestock insurance.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 4 (2012)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/caer.htm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Townsend, R.M., 1991.
"Risk and Insurance in Village India,"
University of Chicago - Economics Research Center
91-3, Chicago - Economics Research Center.
- Robert M. Townsend, . "Risk and Insurance in Village India," University of Chicago - Population Research Center 91-3a, Chicago - Population Research Center.
- Hongbin Cai & Yuyu Chen & Hanming Fang & Li-An Zhou, 2009.
"Microinsurance, Trust and Economic Development: Evidence from a Randomized Natural Field Experiment,"
NBER Working Papers
15396, National Bureau of Economic Research, Inc.
- Hongbin Cai & Yuyu Chen & Hanming Fang & Li-An Zhou, 2009. "Microinsurance, Trust and Economic Development: Evidence from a Randomized Natural Field Experiment," PIER Working Paper Archive 09-034, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Kochar, Anjini, 1997. "An empirical investigation of rationing constraints in rural credit markets in India," Journal of Development Economics, Elsevier, vol. 53(2), pages 339-371, August.
- Benjamin M. Gramig & Christopher A. Wolf, 2007. "Estimating Within-Herd Preventive Spillovers in Livestock Disease Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1219-1225.
- Serra, Teresa & Goodwin, Barry K., 2002.
"Price Transmission And Asymmetric Adjustment In The Spanish Dairy Sector,"
2002 Annual meeting, July 28-31, Long Beach, CA
19622, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Teresa Serra & Barry Goodwin, 2003. "Price transmission and asymmetric adjustment in the Spanish dairy sector," Applied Economics, Taylor & Francis Journals, vol. 35(18), pages 1889-1899.
- Richard E. Just & Linda Calvin & John Quiggin, 1999.
"Adverse Selection in Crop Insurance: Actuarial and Asymmetric Information Incentives,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 81(4), pages 834-849.
- Just, Richard E. & Calvin, Linda & Quiggin, John, 1993. "Adverse Selection in Crop Insurance: Actuarial and Asymmetric Information Incentives," Working Papers 197809, University of Maryland, Department of Agricultural and Resource Economics.
- Udry, Christopher, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 495-526, July.
- Xavier Giné & Robert Townsend & James Vickery, 2007.
"Patterns of rainfall insurance participation in rural India,"
302, Federal Reserve Bank of New York.
- Xavier Giné & Robert Townsend & James Vickery, 2008. "Patterns of Rainfall Insurance Participation in Rural India," World Bank Economic Review, World Bank Group, vol. 22(3), pages 539-566, October.
- Gine, Xavier & Townsend, Robert & Vickery, James, 2007. "Patternsof rainfall insurance participation in rural India," Policy Research Working Paper Series 4408, The World Bank.
- Gunderson, Morley, 1974. "Retention of trainees : A study with dichotomous dependent variables," Journal of Econometrics, Elsevier, vol. 2(1), pages 79-93, May.
- Meng, Chun-Lo & Schmidt, Peter, 1985. "On the Cost of Partial Observability in the Bivariate Probit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 71-85, February.
- David Mushinski, 1999. "An analysis of offer functions of banks and credit unions in Guatemala," Journal of Development Studies, Taylor & Francis Journals, vol. 36(2), pages 88-112.
- Barry K. Goodwin & Monte L. Vandeveer & John L. Deal, 2004. "An Empirical Analysis of Acreage Effects of Participation in the Federal Crop Insurance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1058-1077.
- Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
- Cécile Wetzels & Aslan Zorlu, 2003. "Wage effects of motherhood: a double selection approach," NIMA Working Papers 22, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
- Boucher, Stephen R. & Guirkinger, Catherine & Trivelli, Carolina, 2006. "Direct Elicitation of Credit Constraints: Conceptual and Practical Issues with an Empirical Application to Peruvian Agriculture," Working Papers 6883, University of California, Davis, Department of Agricultural and Resource Economics.
When requesting a correction, please mention this item's handle: RePEc:eme:caerpp:v:4:y:2012:i:2:p:233-255. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If references are entirely missing, you can add them using this form.