Journal
ENVIRONMENTAL & RESOURCE ECONOMICS
Volume 54, Issue 2, Pages 179-200Publisher
SPRINGER
DOI: 10.1007/s10640-012-9586-y
Keywords
Insurance demand; Governmental relief; Natural hazards
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This paper discusses the problem of crowding out of insurance by co-existing governmental relief programs-the so-called 'charity hazard'aEuroin the context of different institutional schemes of governmental disaster relief in Austria and Germany. We test empirically whether an assured partial relief scheme (as in Austria) drives a stronger crowding out of private insurance than a scheme promising full relief which is subject to ad-hoc political decision making (as in Germany). Our general finding is that the institutional design of governmental relief programs significantly affects the demand for private natural hazard insurance.
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