The influence of past experience on farmers’ preferences for hog insurance products: a natural experiment and choice experiment in China

Abstract

Hog insurance is essential for the safety of pork production in developing countries. Although livestock insurance has been found to have positive impacts on farmers’ welfare and agricultural production, it has not lived up to its full potential. In this study, a natural experiment combined with a choice experiment is conducted among hog farms in four townships in China to explore the influence of past experience with hog insurance on farmers’ preferences and willingness to pay (WTP) for hog insurance attributes. Employing the random parameter logit model, we find robust evidence that farmers have heterogeneous preferences for insurance attributes and attach great importance to the involvement of government in insurance operation. Furthermore, farmers’ past insurance experience plays a vital role in their demand for hog insurance and significantly changes their WTP for insurance attributes.