HETEROGENEOUS CHOICE IN THE DEMAND FOR CROP INSURANCE IN CHINA: RESULTS FROM IN-THE-FIELD CHOICE EXPERIMENT
Agricultural insurance is rapidly becoming one of the most important policy initiatives in Chinese agriculture. While numerous studies have examined crop insurance in China, several important aspects of the problem remain elusive. One of these is the determination of the demand for agricultural insurance and the willingness to pay (WTP) for coverage relative to risk, amongst other important attributes. The current pricing structure in China is relatively homogenous, with farmers paying a similar rate regardless of local conditions. Under these conditions, determining a ‘true’ demand response to different premium structures is difficult because there is insufficient exogenous variation in premiums from which to judge. To overcome this problem, I conducted in-the-field discrete choice experiments involving 417 farmers across 5 Chinese provinces in 2018. Overall, farmers prefer a crop insurance with lower premium, higher indemnity, issued by a state-owned insurance company and is acceptable as a loan collateral when given a higher frequency of disaster. In addition, it was found that education, years of farming, connection with government, economic situation and knowledge on crop insurance affect farmers’ ranking and willingness to pay for the above attributes. Since the research focuses on both overall demand and regional differences, the findings help to better design the insurance products in order to meet the actual demand of the farmers in that particular area and provide benefits to both farmers and insurance companies.
Applied Economics; Mixed Logit; choice experiment; heterogeneous choice; insurance demand; Economics; Agriculture economics
Turvey, Calum G.
Ifft, Jennifer Ellen
Applied Economics and Management
M.S., Applied Economics and Management
Master of Science
dissertation or thesis