We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Ex‐post moral hazard in prevented planting.
- Authors
Kim, Taehoo; Kim, Man‐Keun
- Abstract
This article analyzes the existence of moral hazard in prevented planting (PP) in the United States. The PP provision is defined as the "failure to plant an insured crop by the final planting date due to adverse events." If the farmer decides not to plant a crop, the farmer receives a PP indemnity. Late planting (LP) is an option for farmers to plant a crop while maintaining crop insurance after the final planting date. Crop insurance may alter farmers' behavior in selecting PP or LP and could increase the likelihood of PP claims even though farmers can choose LP. This study finds evidence that a farmer with higher insurance coverage tends to choose PP more often (ex‐post moral hazard). Spatial panel models attest to the existence of the ex‐post moral hazard in PP empirically. Empirical results show that the PP ratio has a positive relationship with insurance coverage in the case of corn production.
- Subjects
UNITED States; PLANTING; CROP insurance; AGRICULTURAL productivity; MORAL hazard
- Publication
Agricultural Economics, 2018, Vol 49, Issue 6, p671
- ISSN
0169-5150
- Publication type
Article
- DOI
10.1111/agec.12451