Farm Bill 2014: An Experimental Investigation of Conservation Compliance

Leading up to the 2014 Farm Bill, the House of Representatives and the Senate proposed alternative changes to the incentive structure for farmer conservation efforts. While both include crop insurance subsidies, the version proposed by the Senate made such subsidies conditional on conservation efforts. This study uses experimental methods to analyze the efficacy of these two alternative designs in comparison to the previous, 2008 Farm Bill, design and investigates in how far additional nudging for empathy can improve on the efficiency. The results support the contention that solely offering financial incentives, as is the case in the 2014 Farm Bill, leads to crowding-out of intrinsic motivations and hence may be counterproductive. Similarly, nudging for empathy by itself is relatively ineffective. Nudging in conjunction with financial incentives, however, has a statistically and economically significant and positive impact on conservation behavior and may therefore offer a relatively cheap way to improve the efficiency of conservation-related legislative efforts