IDEAS home Printed from https://ideas.repec.org/p/ags/aaea06/21073.html
   My bibliography  Save this paper

Factors Affecting Crop Insurance Purchase Decisions in Northern Illinois

Author

Listed:
  • Ginder, Matthew G.
  • Spaulding, Aslihan D.

Abstract

When making crop insurance purchase decisions, farmers must consider multiple factors. This paper examines such factors through the use of a survey conducted in a 42 county region of Northern Illinois during 2005. Participants were asked who most influenced their crop insurance purchase decision and if the availability of a Premium Discount Plan (PDP) affected their decision. Respondents indicated that they generally made crop insurance purchase decisions independently, and that the availability of a PDP influenced about 25% of the decisions made. Questions about the importance of ten specific purchase factors were also asked in two distinct groups of five factors each. In one group of factors, price of the insurance was found to be more important than the probability of receiving a claim payment. The other group of factors revealed that government subsidization of premium and weather concerns were highly important to survey participants. Results have also been summarized according to the risk attitude of respondents. Crop insurance participation, plan and coverage level, and other demographic data were collected as well. Further analysis will be conducted to determine relationships between purchase decision factors and the characteristics of the respondents.

Suggested Citation

  • Ginder, Matthew G. & Spaulding, Aslihan D., 2006. "Factors Affecting Crop Insurance Purchase Decisions in Northern Illinois," 2006 Annual meeting, July 23-26, Long Beach, CA 21073, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21073
    DOI: 10.22004/ag.econ.21073
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/21073/files/sp06gi01.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.21073?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Claassen, Roger & Lubowski, Ruben N. & Roberts, Michael J., 2005. "Extent, Location, and Characteristics of Land Cropped Due to Insurance Subsidies," 2005 Annual meeting, July 24-27, Providence, RI 19546, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Bruce A. Babcock & Chad E. Hart, 2005. "Influence of the Premium Subsidy on Farmers' Crop Insurance Coverage Decisions," Center for Agricultural and Rural Development (CARD) Publications 05-wp393, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Keith H. Coble & Thomas O. Knight & Rulon D. Pope & Jeffery R. Williams, 1997. "An Expected-Indemnity Approach to the Measurement of Moral Hazard in Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 216-226.
    4. Barnett, Barry J. & Skees, Jerry R. & Hourigan, James D., 1990. "Explaining Participation in Federal Crop Insurance," 1990 Annual meeting, August 5-8, Vancouver, Canada 270875, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Shiva S. Makki & Agapi Somwaru, 2001. "Farmers' Participation in Crop Insurance Markets: Creating the Right Incentives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 662-667.
    6. Shaik, Saleem & Coble, Keith H. & Knight, Thomas O., 2005. "Revenue Crop Insurance Demand," 2005 Annual meeting, July 24-27, Providence, RI 19319, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Thomas O. Knight & Keith H. Coble, 1997. "Survey of U.S. Multiple Peril Crop Insurance Literature Since 1980," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 19(1), pages 128-156.
    8. Teresa Serra & Barry K. Goodwin & Allen M. Featherstone, 2003. "Modeling changes in the U.S. demand for crop insurance during the 1990s," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 63(2), pages 109-125, November.
    9. Calvin, Linda, 1992. "Participation in the U.S. Federal Crop Insurance Program," Technical Bulletins 312329, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ashimwe, Olive, 2016. "An Economic Analysis Of Impact Of Weather Index-Based Crop Insurance On Household Income In Huye District Of Rwanda," Research Theses 265675, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Ashimwe, Olive, 2016. "An Economic Analysis Of Impact Of Weather Index-Based Crop Insurance On Household Income In Huye District Of Rwanda," Research Theses 276460, Collaborative Masters Program in Agricultural and Applied Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rogna, Marco & Schamel, Günter & Weissensteiner, Alex, 2019. "Choosing Between Hail Insurance and Anti-Hail Nets: A Simple Model and a Simulation among Apples Producers in South Tyrol," 2019: Trading for Good - Agricultural Trade in the Context of Climate Change Adaptation and Mitigation... Symposium, June 23-25, 2019, Seville, Spain 312593, International Agricultural Trade Research Consortium.
    2. Salazar, Cesar & Jaime, Marcela & Pinto, Cristian & Acuna, Andres, 2019. "Interaction between crop insurance and technology adoption decisions: The case of wheat farmers in Chile," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(3), July.
    3. Dragos, Cristian Mihai & Dragos, Simona Laura & Mare, Codruta & Muresan, Gabriela Mihaela & Purcel, Alexandra-Anca, 2023. "Does risk assessment and specific knowledge impact crop insurance underwriting? Evidence from Romanian farmers," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 343-358.
    4. F. G. Santeramo & B. K. Goodwin & F. Adinolfi & F. Capitanio, 2016. "Farmer Participation, Entry and Exit Decisions in the Italian Crop Insurance Programme," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 639-657, September.
    5. Hanson, Steven D. & Black, J. Roy & Wang, H. Holly, 2000. "Can Revenue Insurance Substitute For Price And Yield Risk Management Instruments?," Staff Paper Series 11655, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    6. Coble, Keith H. & Barnett, Barry J., 1999. "The Role Of Research In Producer Risk Management," Professional Papers 15803, Mississippi State University, Department of Agricultural Economics.
    7. Richards, Timothy J., 2000. "A Two-Stage Model Of The Demand For Specialty Crop Insurance," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(1), pages 1-18, July.
    8. Capitanio, Fabian & Adinolfi, Felice & Di Pasquale, J. & Contò, F., 2013. "¿Cuáles son los determinantes de la demanda de seguros agrícolas en Italia?," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 13(01).
    9. Coble, Keith H., 2000. "Farm Risk Policy At A Crossroad," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(1), pages 1-14, March.
    10. Sharma, Sankalp & Walters, Cory G., 2018. "Influence of Farm and Lease Type on Crop Insurance Returns," 2018 Annual Meeting, August 5-7, Washington, D.C. 273881, Agricultural and Applied Economics Association.
    11. Pennings, Joost M.E. & Isengildina, Olga & Irwin, Scott H. & Good, Darrel L. & Garcia, Philip & Frank, Julieta & Kuiper, W. Erno, 2005. "Complex Choices: Producers Risk Management Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19550, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Woodard, Joshua D. & Chiu Verteramo, Leslie & Miller, Alyssa P., 2015. "Adaptation of U.S. Agricultural Production to Drought and Climate Change," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205903, Agricultural and Applied Economics Association.
    13. Enjolras, Geoffroy & Sentis, P., 2008. "The Main Determinants of Insurance Purchase: An Empirical Study on Crop Insurance Policies in France," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44395, European Association of Agricultural Economists.
    14. Xudong Rao & Yuehua Zhang, 2020. "Livestock insurance, moral hazard, and farmers’ decisions: a field experiment among hog farms in China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 134-156, January.
    15. Teresa Serra & Barry K. Goodwin & Allen M. Featherstone, 2003. "Modeling changes in the U.S. demand for crop insurance during the 1990s," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 63(2), pages 109-125, November.
    16. Luckstead, Jeff & Devadoss, Stephen, 2016. "Implication of 2014 Farm Policies for Wheat Production," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235362, Agricultural and Applied Economics Association.
    17. Makki, Shiva S. & Somwaru, Agapi, 2002. "Asymmetric Information In Cotton Insurance Markets: Evidence From Texas," 2002 Annual meeting, July 28-31, Long Beach, CA 19827, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Chunli, Wan & Dongli, Wu, 2021. "Nonparametric Estimation of Farmers’ Willingness to Accept: Implication for Calculating Crop Insurance Amount," 2021 ASAE 10th International Conference (Virtual), January 11-13, Beijing, China 329428, Asian Society of Agricultural Economists (ASAE).
    19. Roger Claassen & Christian Langpap & JunJie Wu, 2017. "Impacts of Federal Crop Insurance on Land Use and Environmental Quality," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 592-613, April.
    20. Jing Yi & Henry L. Bryant & James W. Richardson, 2020. "How do premium subsidies affect crop insurance demand at different coverage levels: the case of corn," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 5-28, January.

    More about this item

    Keywords

    Risk and Uncertainty;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea06:21073. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.