Semester of Graduation

Fall 2022

Degree

Master of Science (MS)

Department

Agricultural Economics and Agribusiness

Document Type

Thesis

Abstract

This research studies the presence of ex-post moral hazard in the prevent planting provision from the crop insurance program in cotton, corn, and soybeans for the Plains Region and Southeast Regions of the U.S. Three fixed effect models are developed using the proportion of prevent plant acres as the dependent variable, as well as weather, input price, expected harvest price and a break-even point for the independent variables. In addition, a fourth fixed effect (FE) model is introduced using the logit transformation and the same variables as in previous models. The results show the number of PP claims has been driven not solely by weather conditions but by other market-related variables such as expected harvest price and input price, for cotton and soybeans. It is concluded that the proportion of prevented plant acres is endogenous to changes in the input price, expected harvest price, and break-even point, in the case of cotton and soybeans, confirming the presence of moral hazard in these two crops. In contrast, the results show no conclusive evidence that suggests moral hazard in corn.

Date

11-3-2022

Committee Chair

Hector Zapata

DOI

10.31390/gradschool_theses.5681

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