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Participation in Multiple-Peril Crop Insurance: Risk Assessments and Risk Preferences of Cranberry Growers

Published online by Cambridge University Press:  10 May 2017

R. A. Dismukes ,
P. G. Allen  and
B. J. Morzuch
R. A. Dismukes
Affiliation:
Department of Agricultural and Resource Economics, University of Massachusetts, Amherst
P. G. Allen
Affiliation:
Department of Agricultural and Resource Economics, University of Massachusetts, Amherst
B. J. Morzuch
Affiliation:
Department of Agricultural and Resource Economics, University of Massachusetts, Amherst
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Abstract

To investigate the poor participation rate of cranberry growers in the multiple-peril crop insurance program, a sample of 15 Massachusetts growers was interviewed. According to their risk preferences, a much greater proportion of growers should have insured, than actually did. A possible solution is to match the distribution used by the insurer closer to that believed by the grower. Adjusting each grower's historical yield series for trend brought the historical and subjective mean yields much closer. However, an aggregate test found the effect of adjustment to be insignificant, implying that the avenue for increased participation lies elsewhere.

Type
Articles
Information
Northeastern Journal of Agricultural and Resource Economics , Volume 18 , Issue 2 , October 1989 , pp. 109 - 117
Copyright
Copyright © 1989 Northeastern Agricultural and Resource Economics Association 

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Footnotes

The comments of two anonymous reviewers greatly improved exposition.

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