Insuring Eggs in Baskets: Should the Government Insure Individual Risks?

dc.contributor.author Hart, Chad
dc.contributor.author Hayes, Dermot
dc.contributor.author Babcock, Bruce
dc.contributor.department Department of Economics (LAS)
dc.date 2018-02-18T02:30:10.000
dc.date.accessioned 2020-06-30T02:07:02Z
dc.date.available 2020-06-30T02:07:02Z
dc.date.issued 2006-02-01
dc.description.abstract <p>The vast majority of crop and revenue insurance policies sold in North America are single-crop policies that insure against low yields or low revenues for each crop grown on a particular farm. This practice of insuring one crop at a time runs counter to the traditional risk management practice of diversifying across several enterprises to avoid putting all of one’s eggs in a single basket. This paper examines the construction of a whole-farm crop revenue insurance program to include livestock price risk. The results show that at coverage levels of 95% or lower, the fair insurance premiums for this product on a well-diversified Iowa farm are far lower than the fair premiums for the corn crop alone on the same farm. The calculation of premium rates for the whole-farm insurance product is derived from a method for imposing correlations first proposed by Iman and Conover in 1982. The potential income transfer from crop insurance is also examined. We find that the income transfer due to the subsidization of single-commodity policies is greater than the total premium for whole-farm policies</p>
dc.description.comments <p>This is a working paper of an article from <em>Canadian Journal of Agricultural Economics,</em> 2006, 54(1); 121-137.</p>
dc.identifier archive/lib.dr.iastate.edu/econ_las_pubs/426/
dc.identifier.articleid 1434
dc.identifier.contextkey 9473490
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath econ_las_pubs/426
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/21640
dc.source.uri http://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=1360&context=card_workingpapers
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agricultural Economics
dc.subject.disciplines Econometrics
dc.subject.disciplines Finance
dc.subject.disciplines Industrial Organization
dc.subject.disciplines Other Economics
dc.title Insuring Eggs in Baskets: Should the Government Insure Individual Risks?
dc.type article
dc.type.genre article
dspace.entity.type Publication
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