Dissertation Chapters

    My dissertation research mainly investigates the impacts of basis risk and biased premium rate setting on U.S federal crop insurance participation rates. The third chapter focuses on water management.

 

  • Basis Risk and Farmers’ Participation in the U.S. Federal Crop Insurance Program: A Conceptual Framework and its Application (Job Market Paper)

      • My first essay proposes a conceptual framework for individual decisions and evaluates the effects of basis risk on both extensive and intensive margin participation rates via different econometric strategies. We employ large unit-level yield data and Monte Carlo simulation with Gaussian Copula method to estimate farmer’s willingness-to-pay for different (coverage level, basis risk) pairs. By linking multiple data sources, we mainly use Fractional Probit with Control Function Approach to estimate the effects of basis risk on participation rates. As expected, we find basis risk has a significantly negative effect on extensive margin, however, a significantly positive effect on intensive margin participation rate.

     

  • Crop Insurance Rate Making, Land Quality and Adverse Selection

      • My second essay proposes a novel procedure to estimate actuarially fair premium rates using large volumes of unit-level yield data. The procedure employs semiparametric B-spline, quantile regression and rejection sampling. Unit-level insurance records are used to estimate the wedge effect on farmer’s coverage level choice where wedge is defined as the ratio of our estimated premium rate to USDA Risk Management Agency (RMA) rate. According to our evaluation, the mispricing issue in federal crop insurance program does depress participation uptake.

     

  • Extensive and Intensive Margins of Irrigation Water Demand in the Great Lakes Region

      • My third essay investigates the issues of water withdrawal and induced potential water scarcity in relatively water-rich regions, such as the Great Lakes. The data from USDA FRIS (Farm and Ranch Irrigation Survey) and IWMS (Irrigation and Water Management Survey) are employed. We explore the water cost estimations in the literature and find the effects of water cost on irrigation water demand. Empirical results reveal that: (a) actual average cost is more significant than imputed costs; (2) price elasticities for both extensive and intensive margin water demand are inelastic. This study also sheds lights on appropriate water management, the role of government support program and long-term sustainability.