Does public flood aid crowd out private insurance II? (Firm survey)

Last registered on January 26, 2022

Pre-Trial

Trial Information

General Information

Title
Does public flood aid crowd out private insurance II? (Firm survey)
RCT ID
AEARCTR-0008737
Initial registration date
January 26, 2022

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
January 26, 2022, 4:05 PM EST

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

Locations

Region

Primary Investigator

Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich

Other Primary Investigator(s)

PI Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich e.V.
PI Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich e.V.
PI Affiliation
ifo Institute – Leibniz Institute for Economic Research at the University of Munich e.V.

Additional Trial Information

Status
On going
Start date
2021-11-29
End date
2022-02-28
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This is the second part of the project. The first part consisted in a household survey (registered as RCT ID: AEARCTR-0008603, on November 28, 2021). In the second part we carry out a similar survey but focus on firms.

The firm surveys concentrate on a region (Upper Baveria, and in particular Oberland) which has experienced several flood events in recent years. Firms are recruited into the surveys via different channels: telephone calls, and invitations to participate in an online survey via local media, regional development agencies, and banks.

The firm questionnaire is analogue to the household questionnaire (with small adjustments), but also includes extra sections on: a) flood experience (e.g. type and size of damage experienced); and b) physical adaptation measures. Further details are provided below.

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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 two groups, which receive, respectively: 1) information about actual aid to flood victims, and 2) generic information about flooding world-wide. (Given the difficulty in recruiting firms, and the smaller sample size, we split the sample into two information groups, as opposed to the three groups in the household survey).

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 flood aid treatment decreases a) willingness to pay for flood insurance, b) willingness to pay for physical adaptation measures, and c) support for mandatory flood insurance;

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

Registration Citation

Citation
Garbarino, Nicola et al. 2022. "Does public flood aid crowd out private insurance II? (Firm survey)." AEA RCT Registry. January 26. https://doi.org/10.1257/rct.8737
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2021-12-15
Intervention End Date
2022-02-28

Primary Outcomes

Primary Outcomes (end points)
- Expectations of flood aid
- Expectations and support for mandatory flood insurance
- Beliefs about share of firms covered by flood insurance in the area
- Willingness to pay for flood insurance and physical adaptation measures
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
- Sample split in two groups of similar size. Each group gets information about flooding.
- The control group receives generic information about the importance of flooding.
- The treatment group receives information about 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 (SOKO)
Randomization Unit
Firms
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
-
Sample size: planned number of observations
600 firms
Sample size (or number of clusters) by treatment arms
300 firms
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number

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