Applied Econometrics with SAS

Chapter 6

Empirical Approaches to Risk

Contents

6.1 Overview

6.2 Frequency and Severity Modeling

6.2.1 Compound Distribution Model

6.2.2 Empirical Analysis

6.3 Agricultural Insurance

6.3.1 Yield Insurance

6.3.2 Empirical Analysis

6.3.3 Revenue Insurance

6.3.4 Dependence and Copulas

6.3.5 Empirical Analysis

6.1 Overview

At its core, all econometric analysis deals with relationships among stochastic variables. A central paradigm of the behavior of individuals acting under conditions of uncertainty is risk aversion. Individual agents facing uncertainty are typically assumed to undertake actions or positive expenditures to avoid risk. Much of the recent research in applied agricultural economics addresses the evaluation of risk and agents’ reactions ...