Web Editors' Choice 2013

By The Editors - 2013-12-24T19:48:39Z

Photograph by Daniel Acker/Bloomberg

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The Success of Failed Crops

“Moral hazard” is the term insurers use to describe the risk that those protected by insurance will act recklessly, knowing the insurer will pay most of the costs. Digging through the arcana of the U.S. crop-insurance program, David J. Lynch and Alan Bjerga uncover a doozie of a federal boondoggle, in which farmers find incentives to grow crops even if they are likely to fail. The twisted incentive stems from a burgeoning government program that started as a safety net for destitute farmers in the Dust Bowl. Major agricultural players from industrial farms to multinational insurers have gathered at the trough to cash in, as a program that few Americans have heard of has climbed in cost by more than 500 percent since 2000, leaving taxpayers with a $14 billion bill for 2012 alone.