Who Is Afraid of Biotic Threats? An Econometric Analysis of Veneto Wine Grape Farmers’ Propensity to Insure

Abstract

This paper aims at understanding what affects farmers’ choices to buy insurance against biotic threats. Using a survey-based dataset with 1187 observations on Veneto wine grapes farms, we regress a probit model with endogenous variables with a maximum likelihood (ML) routine. The results corroborate the microeconomic theory according to which risk-adverse individuals are more propense to insure. In our framework, the farmers’ socioeconomic characteristics are treated as endogenous variables, which exist/are predetermined before the choice to insure (or not). This paper discusses the results in a policy perspective.

Keywords

• risk aversion/propensity
• probit with endogenous regressors
• maximum likelihood estimation routing
• insurance market
• missing markets