Findings from University of Wisconsin Madison Has Provided New Data on Crop Insurance (Inertia In the Us Federal Crop Insurance Market): Agriculture – Crop Insurance

2025 MAY 06 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Current study results on Agriculture - Crop Insurance have been published. According to news reporting from Madison, Wisconsin, by NewsRx editors, the research stated, “We document significant inertia in farmers’ crop insurance choices using a large panel of farm insurance records. Farmers often retain their previous year’s plans, even after substantial shocks.”

The news correspondents obtained a quote from the research from the University of Wisconsin Madison, “We quantify inertia as the cost of switching plans in a discrete choice framework, incorporating an inertia indicator along with plan-specific attributes such as premiums, subsidies, and expected indemnities. These attributes are constructed based on individual farm characteristics. Our analysis estimates the average switching cost at approximately $10.9 per acre, comparable to the average per-acre premium for the yield insurance plan (APH) at 65% coverage and the revenue insurance plan (CRC) at 55% coverage.”

According to the news reporters, the research concluded: “Explicit and implicit switching costs, information friction, and inattention contribute to this inertia.”

This research has been peer-reviewed.

For more information on this research see: Inertia In the Us Federal Crop Insurance Market. International Journal of Industrial Organization, 2025;100. International Journal of Industrial Organization can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; International Journal of Industrial Organization - http://www.journals.elsevier.com/international-journal-of-industrial-organization/)

Our news journalists report that additional information may be obtained by contacting Xiaodong Du, University of Wisconsin Madison, Agr & Appl Econ, Madison, WI 53706, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.ijindorg.2025.103149. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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