DOES THE SAMARITAN'S DILEMMA MATTER? EVIDENCE FROM U.S. AGRICULTURE

Tatyana Deryugina, Barrett Kirwan

Research output: Contribution to journalArticlepeer-review

Abstract

The Samaritan's dilemma posits a downside to charity: recipients may rely on free aid instead of their own efforts. Anecdotally, the expectation of free assistance is thought to be important for decisions about insurance and risky behavior in numerous settings, but reliable empirical evidence is scarce. We estimate whether the Samaritan's dilemma exists in U.S. agriculture, where both private crop insurance and frequent federal disaster assistance are present. We find that bailout expectations are qualitatively and quantitatively important for the insurance decision. Furthermore, aid expectations reduce both expenditure on farm inputs and subsequent crop revenue. (JEL D72, H84, Q18).

Original languageEnglish (US)
Pages (from-to)983-1006
Number of pages24
JournalEconomic Inquiry
Volume56
Issue number2
DOIs
StatePublished - Apr 2018

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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