The Impact Of Past Experience On Farmers’ Demand And Preferences For Hog Insurance

Hog insurance plays a vital role in stabilizing the supply of the Chinese pork market.Although the Chinese government has been promoting access to hog insurance for farmers by providing insurance premium subsidies,the demand for hog insurance is still insufficient.Therefore,there is a need to improve the current understanding of farmers’ preferences for hog insurance and the determinants of their preferences.This study uses field survey data collected in Jiyuan County,Henan Province,from 2013-2014 to explore the impact of farmers’ hog insurance experience on their willingness to renew the hog insurance and their preferences for insurance attributes.Taking the pilot of mandatory hog insurance in two townships in Jiyuan County as a natural experimental framework,this study explores the causal effect of farmers’ experience in participating in hog insurance on their willingness to renew the hog insurance.Utilizing the variable “whether the farmer is located at the treatment townships” as an instrumental variable,this study employs an Extended Probit Model for empirical analysis.Furthermore,this study combines the natural experiment with choice experiment and uses the Conditional Logit Model and Mixed Logit Model to analyze farmers’ preference and willing-to-pay for the attributes of hog insurance products.Besides,we focus on exploring the influences of hog insurance experience on farmers’ preferences.The main research conclusions of this article are:(1)Farmers’ experience in participating in hog insurance will significantly increase their willingness to renew hog insurance by 11%.(2)Farmers have heterogeneous preferences for hog insurance products.Government involvement in hog insurance has a significant positive effect on farmers’ willingness to participate.Also,overall Chinese hog farmers prefer the hog insurance products with higher coverage,less stringent weight requirement and lower premium.Differences in farmers’ risk attitudes,trust in government and insurance salespersons,and production scale can account for preference heterogeneity.(3)Farmers’ experience in participating in hog insurance will also significantly change their preferences for insurance attributes.Farmers with hog insurance only care about whether or not the government is involved,the minimum weight requirement and the premium when they choose among different insurance products.Unlike farmers who had no insurance experience,farmers in the experimental group do not care about the coverage level and insurance claim speed,which somehow reflects their experience of participating in hog insurance.Findings from this study shed light on how farmers make decisions when choosing among different insurance products,which might provide useful information for the government and the insurance company to design insurance programs that better suit farmers’ needs.These findings suggest that:(1)the promotion and education programs may be used to promote farmers’ participation in hog insurance;(2)the government should play a leading role in operating hog insurance;(3)the insurance company needs to design flexible insurance products and dynamically adjust insurance schemes to stimulate farmers’ enthusiasm for insurance participation.