Exploiting the Relationship between Farm-Level Yields and County-Level Yields for Applied Analysis

Abstract

County-level yield data are used in applied research and crop insurance policy in place of farm-level yield data, which are likely sparse, not broadly representative, and subject to selection bias. We exploit the fact that county-level yields are the aggregate of farm-level yields to derive bounds that can be reduced to direct relationships between county- and farm-level yields under certain conditions. Simulation experiments indicate that crop insurance premium estimates derived from this method have the potential for bias in certain conditions but are reasonably precise in other conditions, suggesting that these relationships are a new tool for applied analysts.

Keywords

• agricultural risk
• crop insurance
• crop yield distributions