Does public flood aid crowd out private insurance?

Last registered on November 28, 2021
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Pre-Trial

Trial Information

General Information

Title
Does public flood aid crowd out private insurance?
RCT ID
AEARCTR-0008603
Initial registration date
November 23, 2021

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 28, 2021, 5:43 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Germany
Region

Primary Investigator

Name
Nicola Garbarino
Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich
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Other Primary Investigator(s)

PI Name
Marie-Theres von Schickfus
PI Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich e.V.
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PI Name
Florian Neumeier
PI Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich e.V.
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PI Name
Sascha Möhrle
PI Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich e.V.
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Additional Trial Information

Status
Completed
Start date
2021-11-06
End date
2021-11-26
Keywords
Environment & Energy, Finance & Microfinance
Additional Keywords
Public Finance, Disaster Aid, Climate Change
JEL code(s)
H84, G52, Q54
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Policymakers often do not want to promise flood aid ex-ante, to encourage households and firms in flood-prone areas to take up flood insurance. But ex-post, they feel compelled to provide aid to flood victims. This tension is visible in recent policy decisions in Germany, where commitments to stop providing aid were followed by promises to cover most of the damage suffered by the victims of heavy floods in the summer of 2021.

We perform an information treatment where we provide respondents with information about these policy decisions. The sample is split in three groups, which receive, respectively: 1) information about commitments to cut flood aid ("low aid"), 2) actual aid to flood victims ("high aid"), and 3) generic information about flooding world-wide.

We ask expectations of flood aid before and after the information treatment, to check whether expectations are updated. We then ask about two main outcomes: the willingness to pay for private flood insurance, and support for a policy that introduces mandatory flood insurance.

The starting hypotheses are:

1) the high (low) flood aid treatment decreases (increases) both willingness to pay for flood insurance and support for mandatory flood insurance;

2) the effect is concentrated among households that i) express a high concern about flood risk; and ii) update their expectations substantially as a result of the information treatment.

We conduct separate surveys of households (online, across Germany) and firms (both by phone and online, focussing in an area with high flood risk). This trial registration refers to the household survey. The firm survey will be registered separately.
External Link(s)

Registration Citation

Citation
Garbarino, Nicola et al. 2021. "Does public flood aid crowd out private insurance?." AEA RCT Registry. November 28. https://doi.org/10.1257/rct.8603-1.0
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Experimental Details

Interventions

Intervention(s)
Information treatment on a sample of German households.
We provide the following information:
- Group 1 (active control group): % of natural disasters (worldwide) that are due floods or storms
- Group 2 (high flood aid information): households and firms in parts of Germany hit by heavy floods in July 2021 will receive flood aid up to 80% of the damage
- Group 3: (low flood aid information): a number of German states have recently committed to stop providing flood aid
Intervention Start Date
2021-11-06
Intervention End Date
2021-11-26

Primary Outcomes

Primary Outcomes (end points)
- Willingness to pay for flood insurance
- Support for a public policy introducing mandatory flood insurance
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
- Sample split in three groups of similar size. Each group gets information about flooding.
- The control group receives generic information about the importance of flooding.
- The two treatment groups receive information about two recent policy decisions in Germany related to flooding. The first policy is the announcement by some German states that they plan to stop providing flood aid (with some exceptions). The second policy is the actual flood aid (80% of damage) promised to the victims of the heavy floods that hit parts of Germany in July 2021.
Experimental Design Details
Randomization Method
Randomization by computer, carried out by survey company (forsa)
Randomization Unit
Households
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
0
Sample size: planned number of observations
Households: 15,000
Sample size (or number of clusters) by treatment arms
Circa 5,000 in each group: "high aid", "low aid" and control.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials