Slides07-2010 - Outline Crop Insurance Applied Sabbatical:...

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Outline Crop Insurance Applied Sabbatical: Lecture VII Charles B. Moss September 7, 2010 Charles B. Moss Applied Sabbatical: Lecture VII
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Outline Crop Insurance 1 Crop Insurance Basics of Crop Insurance Estimating Distribution Functions Charles B. Moss Applied Sabbatical: Lecture VII
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Outline Crop Insurance Basics of Crop Insurance Estimating Distribution Functions Basics of Crop Insurance Nelson, Carl H. ”The Influence of Distributional Assumptions on the Calculation of Crop Insurance Premia.” North Central Journal of Agricultural Economics 12(1)(Jan 1990): 718. In the past, farmers received assistance during disasters (i.e., draught or floods) through access to concessionary credit. Increasingly during the last 10 years of the 20th century agricultural policy in the United States shifted toward market-based crop insurance. Charles B. Moss Applied Sabbatical: Lecture VII
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Outline Crop Insurance Basics of Crop Insurance Estimating Distribution Functions This insurance was supposed to be actuarially sound so that producers would make decisions that were consistent with maximizing economic surplus. Following Nelsons discussion, the loss of a crop insurance event could be parameterized as L = AC AR (1) Charles B. Moss Applied Sabbatical: Lecture VII
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Outline Crop Insurance Basics of Crop Insurance Estimating Distribution Functions Where C is the level of coverage (i.e., the number of bushels guaranteed under the insurance policy, typically 10, 20, or 40 percent of some expected level of yield). A is the probability that level of yield. R is the expected value of the yield given that an insured event has occurred.
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This note was uploaded on 07/15/2011 for the course AEB 6180 taught by Professor Staff during the Spring '10 term at University of Florida.

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Slides07-2010 - Outline Crop Insurance Applied Sabbatical:...

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