Journal
AUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS
Volume 65, Issue 3, Pages 679-703Publisher
WILEY
DOI: 10.1111/1467-8489.12434
Keywords
ambiguity aversion; crop insurance; field experiments; liquidity constraints; risk aversion
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Funding
- German Research Foundation (DFG) [AB 288/9-1]
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This paper analyzes smallholder farmers' willingness to participate in crop insurance programs using recent data from cocoa farmers in Ghana. The study found that risk preferences, ambiguity aversion, and liquidity constraints influence farmers' willingness to participate, and that wealth, trust, and education also play a role in their participation decisions.
This paper analyses smallholder farmers' willingness to participate in crop insurance programs, using recent data from cocoa farmers in Ghana. Given the significance of output uncertainty and imperfect capital and insurance markets, we develop a theoretical framework to analyse how risk and ambiguity aversion, and liquidity constraints influence farmers' crop insurance participation decisions. We employ field experiments to elicit farmers' ambiguity and risk aversion, the stated preference approach to obtain information on farmers' willingness to participate in crop insurance programs, and a discrete choice model to examine the factors that influence their participation decisions. We find that risk preferences, ambiguity aversion, and liquidity constraints influence farmers' willingness to participate in crop insurance programs. The results also reveal that the probability of participating in crop insurance programs is positively influenced by wealth, trust and education of the farmers.
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