Understanding farmers’ valuation of agricultural insurance: Evidence from Vietnam

Michael King and Anuj Pratap Singh

Food Policy, 2020, vol. 94, issue C

Abstract: Agricultural index insurance offers smallholder farmers the potential to manage pervasive weather and environmental risks, and smooth income over time. Yet despite the potential benefits, take-up of index insurance has been largely disappointing. We employ a novel approach to investigate the reasons for low demand and we confirm that farmers systematically undervalue agricultural index insurance. We find that access to private transfers acts as a substitute for insurance demand, while membership of a farmer’s union helps explain why farmers value index insurance. Finally, we find that individual riskiness is positively related to willingness to pay for agricultural index insurance and interpret this as further evidence that, within the context of basis risk and lack of trust in insurers, farmers valuation of agricultural index insurance can be better understood through behavioural theories such as ambiguity aversion or prospect theory.

Keywords: Agricultural insurance; Willingness to pay; Expected utility theory; Risk aversion; Social capital; Remittances (search for similar items in EconPapers)
JEL-codes: D81 D84 D91 G22 O13 Q14 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0306919220300452
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfpoli:v:94:y:2020:i:c:s0306919220300452

DOI: 10.1016/j.foodpol.2020.101861

Access Statistics for this article

Food Policy is currently edited by J. Kydd

More articles in Food Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().