Understanding farmers' valuation of agricultural insurance: Evidence from Viet Nam

Arbeitspapier

We employ a novel approach to investigate the reasons for a low demand for agricultural insurance. We confirm that farmers systematically undervalue agricultural insurance. First, we find that private transfers, mainly from family members, explain under-valuation of agricultural insurance. Second, membership of a farmer's union, interpreted as a form of social capital or pro-active behaviour, explains the differential between willingness to pay (WTP) and the predicted economic value of insurance. Third, we help answer the puzzle why the most risk averse are least likely to take up agricultural insurance. We find that over-confidence holds a positive and significant relationship with WTP for agricultural insurance and interpret this as evidence that, within the context of implementation challenges and likely concerns about insurer viability, only the most confident are likely to purchase insurance. These results hold across a range of robustness checks.

Object Details

• ISBN: 978-92-9256-535-0
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIDER Working Paper ; No. 2018/93

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Expectations; Speculations ; Insurance; Insurance Companies; Actuarial Studies ; Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products ; Agricultural Finance
• Subject: Insurance ; agriculture ; risk ; expected utility theory ; willingness to pay

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): King, Michael ; Singh, Anuj Pratap
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2018

Further information

• DOI: doi:10.35188/UNU-WIDER/2018/535-0
• Handle: http://hdl.handle.net/10419/190142
• Last update: 10.03.2025, 11:45 AM CET