Crop Revenue and Yield Insurance Demand: A Subjective Probability Approach

Abstract

A multinomial logit is utilized to model the choice of whether to purchase yield or revenue insurance using subjectively elicited survey data. Our results indicate that the demand for crop insurance is inelastic (−0.40), consistent with most earlier yield elasticity estimates, but the elasticity for choices between yield and revenue insurance is found to be relatively more elastic (−0.88).