Influence of the Premium Subsidy on Farmers' Crop Insurance Coverage Decisions

dc.contributor.author Babcock, Bruce
dc.contributor.author Babcock, Bruce
dc.contributor.author Hart, Chad
dc.contributor.author Hart, Chad
dc.contributor.department Center for Agricultural and Rural Development
dc.date 2018-02-16T14:33:08.000
dc.date.accessioned 2020-06-30T01:04:22Z
dc.date.available 2020-06-30T01:04:22Z
dc.date.embargo 2015-06-17
dc.date.issued 2005-04-01
dc.description.abstract <p>The Agricultural Risk Protection Act greatly increased the expected marginal net benefit of farmers buying high-coverage crop insurance policies by coupling premium subsidies to coverage level. This policy change, combined with cross-sectional variations in expected marginal net benefits of high-coverage policies, is used to estimate the role that premium subsidies play in farmers' crop insurance decisions. We use county data for corn, soybeans, and wheat to estimate regression equations that are then used to obtain insight into two policy scenarios. We first estimate that eventual adoption of actuarially fair incremental premiums, combined with current coupled subsidies, would increase farmers' purchase of high-coverage policies by almost 400 percent from 1998 levels across the three crops and two plans of insurance included in the analysis. We then estimate that a return to decoupled subsidies would decrease farmers' high-coverage purchase decisions by an average of 36 percent.</p>
dc.identifier archive/lib.dr.iastate.edu/card_workingpapers/375/
dc.identifier.articleid 1412
dc.identifier.contextkey 7231511
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath card_workingpapers/375
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/12715
dc.source.bitstream archive/lib.dr.iastate.edu/card_workingpapers/375/05wp393.pdf|||Fri Jan 14 23:50:41 UTC 2022
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agricultural Economics
dc.subject.disciplines Behavioral Economics
dc.subject.disciplines Economic Policy
dc.subject.disciplines Finance
dc.subject.keywords Agricultural Risk Protection Act
dc.subject.keywords crop insurance
dc.subject.keywords premium subsidies
dc.title Influence of the Premium Subsidy on Farmers' Crop Insurance Coverage Decisions
dc.type article
dc.type.genre article
dspace.entity.type Publication
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relation.isAuthorOfPublication 3e63cf10-4246-4920-a2a0-71c044550661
relation.isOrgUnitOfPublication 1a6be5f1-4f64-4e48-bb66-03bbcc25c76d
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