IDEAS home Printed from https://ideas.repec.org/p/ags/aaea11/103158.html
   My bibliography  Save this paper

Hog Insurance Adoption and Suppliers' Discrimination: A Bivariate Probit Model with Partial Observability

Author

Listed:
  • Cao, Ying
  • Zhang, Yuehua

Abstract

This paper explores the factors that impact insurance choices. Specially designed survey questions allow one to fully observe the demand tendency by the farmers and partially observe the supply tendency by the insurance company. A joint estimation of insurance decision by both supply and demand sides suggested that factors performing different roles in affecting insurance participation game. Farmer’s age and education have positive impact on insurance demand, but are indifference to the insurance providers. Insurance suppliers care more about farmers’ experience in the field, but this experience occasionally results in overconfidence for the farmers and hence, impedes insurance purchasing. Production scales, proxy by sow inventory, is put more weight by the farmers than the suppliers when making decisions. Production efficiency measures, which performs as incentives for farmers to purchase insurance, acts as some disadvantages in the suppliers’ point of view. While the suppliers prefer customers who use vaccine, the hog producers tend to treat vaccine as a substitute for insurance so as to prevent disease risk. The study also generates discussion on the topics such as short-run vs. long-run factor impact by comparing past insurance choices and current choices. Information on choices regarding different types of insurance (hog and breeding sow) is also discussed. Results from bivairate probit model offers deeper understanding about livestock insurance choices and further insights to improve policy design and promote participation.

Suggested Citation

  • Cao, Ying & Zhang, Yuehua, 2011. "Hog Insurance Adoption and Suppliers' Discrimination: A Bivariate Probit Model with Partial Observability," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103158, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea11:103158
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/103158
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. Gin, Xavier & Yang, Dean, 2009. "Insurance, credit, and technology adoption: Field experimental evidencefrom Malawi," Journal of Development Economics, Elsevier, vol. 89(1), pages 1-11, May.
    3. O'Donoghue, Erik J. & Key, Nigel D. & Roberts, Michael J., 2005. "Does risk matter for farm businesses? The effect of crop insurance on production and diversification," 2005 Annual meeting, July 24-27, Providence, RI 19397, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Livestock Insurance Choices; Bivariate Probit; Partial Observability; Agribusiness; International Development; Livestock Production/Industries; Risk and Uncertainty; C35; D13; Q12;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ags:aaea11:103158. 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: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.