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Insurance for Technology Adoption: An Experimental Evaluation of Schemes and Subsidies with Maize Farmers in Mexico

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  • Hanna Freudenreich
  • Oliver Mußhoff

Abstract

For farmers in developing countries, the combination of both risk aversion and the lack of insurance is often a major impediment to adoption of productivity†enhancing technologies, such as higher yielding hybrid seed. In a framed field experiment with Mexican maize farmers, we investigate whether bundling hybrid seed with an insurance scheme can increase its adoption, while also controlling for risk aversion. We test insurance schemes with different levels of risk coverage and premium subsidies and find that (1) all schemes significantly increase the degree of adoption of the higher yielding seed, (2) partial insurance schemes perform worse than full insurance, (3) weather index insurance with geographical basis risk performs no worse than indemnity insurance, and (4) premium subsidies significantly increase the adoption effect of indemnity insurance, but not that of index insurance.

Suggested Citation

  • Hanna Freudenreich & Oliver Mußhoff, 2018. "Insurance for Technology Adoption: An Experimental Evaluation of Schemes and Subsidies with Maize Farmers in Mexico," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(1), pages 96-120, February.
    • Handle: RePEc:bla:jageco:v:69:y:2018:i:1:p:96-120
    DOI: 10.1111/1477-9552.12226
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    Cited by:

    1. Christoph Duden & Oliver Mußhoff & Frank Offermann, 2023. "Dealing with low‐probability shocks: The role of selected heuristics in farmers’ risk management decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 54(3), pages 382-399, May.
    2. David Alfaro‐Serrano & Tanay Balantrapu & Ritam Chaurey & Ana Goicoechea & Eric Verhoogen, 2021. "Interventions to promote technology adoption in firms: A systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(4), December.
    3. Simone Cerroni, 2020. "Eliciting farmers’ subjective probabilities, risk, and uncertainty preferences using contextualized field experiments," Agricultural Economics, International Association of Agricultural Economists, vol. 51(5), pages 707-724, September.
    4. Nawab Khan & Ram L. Ray & Hazem S. Kassem & Muhammad Ihtisham & Badar Naseem Siddiqui & Shemei Zhang, 2022. "Can Cooperative Supports and Adoption of Improved Technologies Help Increase Agricultural Income? Evidence from a Recent Study," Land, MDPI, vol. 11(3), pages 1-18, March.
    5. Leshan Yu & Yan Song & Haixia Wu & Hengtong Shi, 2023. "Credit Constraint, Interlinked Insurance and Credit Contract and Farmers’ Adoption of Innovative Seeds-Field Experiment of the Loess Plateau," Land, MDPI, vol. 12(2), pages 1-28, January.
    6. Jonas R. Jahnert & Hato Schmeiser & Florian Schreiber, 2022. "Pricing strategies in the German term life insurance market: An empirical analysis," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(1), pages 19-34, April.
    7. Williams Ali & Awudu Abdulai & Ashok K. Mishra, 2020. "Recent Advances in the Analyses of Demand for Agricultural Insurance in Developing and Emerging Countries," Annual Review of Resource Economics, Annual Reviews, vol. 12(1), pages 411-430, October.
    8. Shahbaz Mushtaq & Jarrod Kath & Roger Stone & Ross Henry & Peter Läderach & Kathryn Reardon-Smith & David Cobon & Torben Marcussen & Neil Cliffe & Paul Kristiansen & Frederik Pischke, 2020. "Creating positive synergies between risk management and transfer to accelerate food system climate resilience," Climatic Change, Springer, vol. 161(3), pages 465-478, August.
    9. Yanyuan Zhang & Xintong Wu, 2023. "Risk Management Effects of Insurance Purchase and Organization Participation: Which Is More Effective?," Agriculture, MDPI, vol. 13(10), pages 1-16, September.

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