Government Insurance Program Design, Incentive Effects, and Technology Adoption: The Case of Skip-Row Crop Insurance

Authors

Joshua D. Woodard, Cornell UniversityFollow
Alexander Pavlista, University of Nebraska-LincolnFollow
Gary D. Schnitkey, University of Illinois at Urbana-ChampaignFollow
Paul Burgener, University of Nebraska-LincolnFollow
Kimberley A. Ward, Windsor Strategy PartnersFollow

Date of this Version

2012

Citation

American Journal of Agricultural Economics 94:4 (2012), pp. 823-837; doi: 10.1093/ajae/aas018

Comments

Copyright © 2012 Joshua D. Woodard, Alexander D. Pavlista, Gary D. Schnitkey, Paul A. Burgener, and Kimberley A. Ward. Published by Oxford University Press on behalf of the Agricultural and Applied Economics Association. Used by permission.

Abstract

Can the availability of poorly-designed government insurance alter technology adoption decisions? A theoretical model of technology adoption and insurance incentive effects for a high- and low-risk technology is developed and explored empirically using a unique dataset of skip-row agronomic trial data. A multivariate nonparametric resampling technique is developed, which augments the trial data with a larger dataset of conventional yields to improve estimation efficiency. Skip-row adoption is found to increase mean yields and reduce risk in areas prone to drought. RMA insurance rules have incentive-distorting impacts which disincentivize skip-row adoption.