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Subjective and objective risk perceptions and the willingness to pay for agricultural insurance: evidence from an in-the-field choice experiment in rural China

Author

Listed:
  • Hong Fu

    (Shandong University of Finance and Economics)

  • Yuehua Zhang

    (Zhejiang University)

  • Yinuo An

    (Cornell University)

  • Li Zhou

    (Nanjing Agricultural University)

  • Yanling Peng

    (Sichuan Agricultural University)

  • Rong Kong

    (Northwest Agriculture and Forestry University)

  • Calum G. Turvey

    (Cornell University)

Abstract

We conducted in-the-field choice experiments in China to investigate farmers’ willingness to pay for crop insurance and to determine how objective and subjective beliefs affect Willingness to Pay (WTP). We deploy three variants of the choice experiment using a priming mechanism on objective and subjective beliefs plus a control. We find that the cuing frame matters in that there are differences in WTP within five attributes and across variants. In terms of practical policy, our results suggest that farmers’ frame of reference toward objective and subjective risks can affect insurance demand.

Suggested Citation

  • Hong Fu & Yuehua Zhang & Yinuo An & Li Zhou & Yanling Peng & Rong Kong & Calum G. Turvey, 2022. "Subjective and objective risk perceptions and the willingness to pay for agricultural insurance: evidence from an in-the-field choice experiment in rural China," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(1), pages 98-121, March.
    • Handle: RePEc:pal:genrir:v:47:y:2022:i:1:d:10.1057_s10713-021-00071-6
    DOI: 10.1057/s10713-021-00071-6
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