Abstract
We find that farmers’ precautionary motives have small impact on optimal corn seeding rates, contrary to their significant influence on savings and asset decisions. Our conceptual model shows that precautionary motives increase seeding rates when higher seeding rates reduce yield risk and decrease them when higher seeding rates increase yield risk. Analysis of Ohio and Illinois field data reveals a U-shaped yield risk response to seeding rates. Simulations indicate a 0.2% seeding rate increase in Ohio and a 0.19% decrease in Illinois due to precautionary motives, while yield insurance reduces optimal seeding rates in both states by up to 2%.
