Adverse selection is often blamed for crop insurance indemnities exceeding premiums plus subsidies. However, nationwide empirical evidence has been lacking or based on inadequate county-level data. This article uses nationwide farm-level data on corn and soybeans to decompose incentives for participation in U.S. multiple peril crop insurance into a risk-aversion incentive (the conventional justification for insurance), an actuarial or subsidy incentive (reflecting government subsidization), and an asymmetric information incentive (which reflects farmers' information advantage). Results show that the risk-aversion incentive is small. Farmers participate in crop insurance primarily to receive the subsidy or because of adverse selection possibilities. Copyright 1999, Oxford University Press.

A retail demand model measured the impact of the Food and Drug Administration's 2006 announcement warning consumers about E. coli O157: H7 contamination in spinach. Model results indicated that bulk lettuces were shock substitutes (in contrast to price substitutes) as consumers purchased fewer spinach products and more bulk lettuce of all types. Results also showed that consumers initially moved away from bagged salads without spinach; but consumer confidence rebounded quickly and expenditures rose. Over a period of sixty-eight weeks, retail expenditures decreased 20% for bagged spinach and 1% for bulk spinach. Retail expenditures for all leafy greens declined just 1%.

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