Public in-Kind Relief and Private Self-Insurance
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This paper provides a new angle on the question of crowding effects of public policies. We examine how non-hypothetical self-insurance behavior by households responds to variations in public investments in relief capabilities based on a large disaster preparedness survey (n = 19,071) conducted in Japan in 2012. In our specific setting which looks at emergency drinking water, (i) government provides in-kind, rather than cash, relief and (ii) the crowding effect observed is more apt to be total, rather than partial. In contrast to much of the literature studying crowding effects of cash relief, we find little evidence for crowding out in emergency drinking water, with an upper bound of 2% at the intensive margin. We also identify important benefits of targeting in-kind relief to households with minors.
KeywordsCrowding-out Disaster preparedness Government relief, natural hazards, in-kind relief
JEL classificationD78 D81 G22 Q54
Valuable comments on previous drafts of this paper have been provided by Christian Almer, Richard Butler, Luisa Dressler, Malte Lech, Paul Raschky, and Paul Schaudt as well as conference and seminar audiences at the 2016 EAERE conference, the Workshop on the Geospatial Analysis of Disasters and the CEAR/MRIC Behavorial Insurance Workshop 2016. We are grateful to Hiroki Onuma and Shinya Horie for research assistance. T. Goeschl’s research has been supported by a travel grant from the HeKKSaGOn network. S. Managi’s research has been supported by a Grant-in-Aid for Specially Promoted Research (26000001) by the Japanese Society for the Promotion of Science.
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