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Acreage Abandonment, Moral Hazard and Crop Insurance

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  • Chen, Shu-Ling

Abstract

Empirical evidence for the existence of moral hazard in the U.S. crop insurance program has been inconclusive. Here we use a nested-dynamic programming framework to estimate an intra-seasonal dynamic model that explicitly incorporates a farmer's crop abandonment decision. The estimation is implemented for selected Texas counties where actuarial performances of the crop insurance program are poor and high incidences of acreage abandonment are frequently observed.

Suggested Citation

  • Chen, Shu-Ling, 2005. "Acreage Abandonment, Moral Hazard and Crop Insurance," 2005 Annual meeting, July 24-27, Providence, RI 19114, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19114
    DOI: 10.22004/ag.econ.19114
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    References listed on IDEAS

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    1. John K. Horowitz & Erik Lichtenberg, 1993. "Insurance, Moral Hazard, and Chemical Use in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 926-935.
    2. Vincent H. Smith & Barry K. Goodwin, 1996. "Crop Insurance, Moral Hazard, and Agricultural Chemical Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 428-438.
    3. Barry K. Goodwin, 1993. "An Empirical Analysis of the Demand for Multiple Peril Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 425-434.
    4. Barry K. Goodwin & Monte L. Vandeveer & John L. Deal, 2004. "An Empirical Analysis of Acreage Effects of Participation in the Federal Crop Insurance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1058-1077.
    5. Mario J. Miranda, 1991. "Area-Yield Crop Insurance Reconsidered," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 233-242.
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