Incentives and Government Relief for Risk

Louis Kaplow

Journal of Risk and Uncertainty, 1991, vol. 4, issue 2, 167-75

Abstract: Government relief is offered for a wide range of risks--natural disaster, economic dislocation, sickness, and injury. This article explores the effect of such relief on incentives and the allocation of risk in a model with private insurance. It is shown that government relief is inefficient, even when its level is less than the private insurance coverage that individuals would otherwise have purchased and even when private insurance coverage is incomplete due to problems of moral hazard. Copyright 1991 by Kluwer Academic Publishers

Date: 1991
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Working Paper: Incentives and Government Relief for Risk (1989)
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