Does the Samaritan's Dilemma Matter? Evidence from U.S. Agriculture

24 Pages Posted: 22 Feb 2018

See all articles by Tatyana Deryugina

Tatyana Deryugina

University of Illinois

Barrett Kirwan

University of Illinois at Urbana-Champaign

Multiple version iconThere are 2 versions of this paper

Date Written: April 2018

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 Classification: D72, H84, Q18

Suggested Citation

Deryugina, Tatyana and Kirwan, Barrett, Does the Samaritan's Dilemma Matter? Evidence from U.S. Agriculture (April 2018). Economic Inquiry, Vol. 56, Issue 2, pp. 983-1006, 2018. Available at SSRN: https://ssrn.com/abstract=3127895 or http://dx.doi.org/10.1111/ecin.12527

Tatyana Deryugina (Contact Author)

University of Illinois ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

HOME PAGE: http://deryugina.com

Barrett Kirwan

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

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