Abstract:
Producers who manipulate and switch their reported crop-yields between separately insured units can increase their insurance indemnities substantially. A statistical model that identifies potential yield switching is developed. The unrestricted statistical model is singular and is identified by imposing a mixture of system-estimable and system-nonestimable restrictions. Lower bound estimates of yield-switching fraud incidence and costs are obtained by applying the model to 207,067 multiple unit producers who purchased crop insurance in 1998. Copyright 2006 American Agricultural Economics Association.