Factors Affecting Livestock Insurance in Nomadic Households of Khuzestan Province: Application of Bayesian Econometrics

Document Type : Research Paper

Authors

• Abas Abdeshahi ¹
• Mostafa Mardani Najaf Abadi ²
• Abbas Mirzaei ²
• Omid Mehrab Ghochani ³

¹ Department of Agricultural Economics, Faculty of Agricultural Engineering and Rural Development, Agricultural Sciences and Natural Resources University of Khuzestan, Molasani, Iran.

² Department of Agricultural Economics, Faculty of Agriculture Engineering and Rural Development, Agricultural Sciences and Natural Resources University of Khuzestan, Mollasani, Iran.

³ Agricultural Education and Extension Institute, Agricultural Extension, Education and Research Organization, Tehran, Iran.

Abstract

Keywords

• Livestock Insurance
• Nomadic Housholds
• Bayesian Econometrics
• Meteropolis-Hastings

Extended Abstract

Introduction

    Agricultural production is among the most risky economic activities, in which various economic, social, natural, and personal risks have created a vulnerable environment for producers. Due to the special nature of its products, the livestock sub-sector is associated with more risks, and therefore reducing the effects of these risks should be at the center of policy makers' decisions. One of the most important policies in this regard, which is supported by experts, is livestock insurance. One of the most important aspects of this policy is its acceptance by the stakeholders. The present study aims to determine the factors affecting the acceptance of livestock insurance by the nomadic households in Khuzestan province.

Material and Methods

    To investigate factors affecting the acceptance of animal insurance by Nomad housholds in Khuzestan province, a binary probit model was estimated. To estimate binary choice models in previous studies, the maximum likelihood method has been used. This method is a frequentist approach that relies on asymptotic assumptions. In other words, the estimates obtained from this method are only reliable in large samples. In the present syudy to estimate probit model, the Metropolis-Hastings of Markov Chain Monte Carlo, which is one of the Bayesian econometric estimators was used. The necessary data were collected by completing questionnaires from 127 nomadic households that were randomly selected.

Results and discussion

   The results showed that variables such as the occurrence of damage, receipt of compensation, number of livestock, and access to the internet positively affect the probability of livestock insurance acceptance by nomadic households, while the age of the household head has a negative effect. In this context, the amount of compensation received has the highest marginal effect on insurance acceptance, approximately 9%. Following this, the dummy variables include the occurrence of damage and internet access each have a marginal effect of about 3%. Since the policyholder must deliver the head of the livestock to the insurance company to prove the occurrence of damage, based on the study results, it is suggested that the insurance company relax this strict policy of proving damage and show more flexibility by using other tools, especially by placing more trust in Nomadic households when paying compensation. Additionally, by providing necessary training, especially for the elderly, their participation in the insurance process should be increased..

Author Contributions

All authors contributed equally to the conceptualization of the article and writing of the original and subsequent drafts.

Data Availability Statement

If the study did not report any data, you might add “Not applicable” here.

Acknowledgements

The authors would like to thank all participants of the present study.

Ethical considerations

The authors avoided data fabrication, falsification, plagiarism, and misconduct.

Conflict of interest

The author declares no conflict of interest.

Conflict of interest

The author declares no conflict of interest.