Author

Francis Annan

Advisor

Tack, Jesse B.

Committee Member

Harri, Ardian

Committee Member

Coble, Keith H.

Date of Degree

1-1-2012

Document Type

Graduate Thesis - Open Access

Degree Name

Master of Science

College

College of Agriculture and Life Sciences

Department

Department of Agricultural Economics

Abstract

Despite the potential benefits of larger datasets for crop insurance ratings, pooling yields with similar distributions is not a common practice. The current USDA-RMA county insurance ratings do not consider information across state lines, a politically driven assumption that ignores a wealth of climate and agronomic evidence suggesting that growing regions are not constrained by state boundaries. We test the appropriateness of this assumption, and provide empirical grounds for benefits of pooling datasets. We find evidence in favor of pooling across state lines, with poolable counties sometimes being as far as 2,500 miles apart. An out-of-sample performance exercise suggests our proposed pooling framework out-performs a no-pooling alternative, and supports the hypothesis that economic losses should be expected as a result of not adopting our pooling framework. Our findings have strong empirical and policy implications for accurate modeling of yield distributions and vis-à-vis the rating of crop insurance products.

URI

https://hdl.handle.net/11668/19881

Comments

hypothesis testing||loss ratio||indemnities||seemingly unrelated regression||mean squared error||robust M-estimator||linear spline function

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