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Risk effects of GM corn: Evidence from crop insurance outcomes and high‐dimensional methods

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  • Serkan Aglasan
  • Barry K. Goodwin
  • Roderick M. Rejesus

Abstract

This study evaluates whether genetically modified (GM) corn hybrids with rootworm resistant traits (GM‐RW) have lower yield risk. A crop insurance actuarial performance measure, the loss cost ratio (LCR), is used to represent yield risk. High‐dimensional methods are utilized in this study to maintain parsimony in the empirical specification, and facilitate estimation. Specifically, we employ the Cluster‐Lasso (cluster‐least absolute shrinkage and selection operator) procedure. This method produces uniformly valid inference on the main variable of interest (i.e., the GM‐RW variable) in a high‐dimensional panel data setting even in the presence of heteroskedastic, non‐Gaussian, and clustered error structures. After controlling for a large set of potential weather confounders using Cluster‐Lasso, we find consistent evidence that GM corn hybrids with rootworm resistant traits have lower yield risk.

Suggested Citation

  • Serkan Aglasan & Barry K. Goodwin & Roderick M. Rejesus, 2023. "Risk effects of GM corn: Evidence from crop insurance outcomes and high‐dimensional methods," Agricultural Economics, International Association of Agricultural Economists, vol. 54(1), pages 110-126, January.
    • Handle: RePEc:bla:agecon:v:54:y:2023:i:1:p:110-126
    DOI: 10.1111/agec.12757
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    References listed on IDEAS

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