Public in-Kind Relief and Private Self-Insurance

Goeschl, Timo, and Shunsuke Managi. “Public in-kind relief and private self-insurance.Economics of Disasters and Climate Change 3.1 (2019): 3-21.

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.

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