Self - Insurance and the Utility of Standard Risk Management Contracts

This paper analyzes the potential trade offs and complementarities that exist between intra-year strategies employing annual price and yield risk contracts and inter-year self-insurance strategies involving intertemporal consumption substitution and borrowing, and explores whether standard crop insurance contracts can be made more useful to farmers if offered with a multiple-year horizon. —————————————— Authors gratefully acknowledge helpful comments received from Joy Harwood, Agapi Somwaru, and Randall Schnepf. The views expressed herein are those of the authors and not necessarily those of the Economic Research Service or U.S. Department of Agriculture.