Journal Article

Government Insurance Program Design, Incentive Effects, and Technology Adoption: The Case of Skip-Row Crop Insurance

Joshua D. Woodard, Alexander D. Pavlista, Gary D. Schnitkey, Paul A. Burgener and Kimberley A. Ward

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 94, issue 4, pages 823-837
Published in print July 2012 | ISSN: 0002-9092
Published online February 2012 | e-ISSN: 1467-8276 | DOI: https://dx.doi.org/10.1093/ajae/aas018
Government Insurance Program Design, Incentive Effects, and Technology Adoption: The Case of Skip-Row Crop Insurance

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  • Agricultural, Environmental, and Natural Resource Economics
  • Technological Change; Research and Development
  • Econometric and Statistical Methods and Methodology: General
  • Agricultural Economics
  • Information, Knowledge, and Uncertainy
  • Insurance

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Can the availability of poorly-designed government insurance alter technology adoption decisions? A theoretical model of technology adoption and insurance incentive effects for a high- and low-risk technology is developed and explored empirically using a unique dataset of skip-row agronomic trial data. A multivariate nonparametric resampling technique is developed, which augments the trial data with a larger dataset of conventional yields to improve estimation efficiency. Skip-row adoption is found to increase mean yields and reduce risk in areas prone to drought. RMA insurance rules have incentive-distorting impacts which disincentivize skip-row adoption.

Keywords: Adverse selection; federal Crop Insurance; insurance design; insurance pricing; nonparametric methods; risk management; skip-row corn; technology adoption; yield risk; Q14; Q00; Q10; Q12; Q16; C15; G22; D82; O38

Journal Article.  8574 words.  Illustrated.

Subjects: Agricultural, Environmental, and Natural Resource Economics ; Technological Change; Research and Development ; Econometric and Statistical Methods and Methodology: General ; Agricultural Economics ; Information, Knowledge, and Uncertainy ; Insurance

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