Finance Papers

Document Type

Journal Article

Date of this Version

9-2015

Publication Source

Ecological Economics

Volume

117

Start Page

153

Last Page

161

DOI

10.1016/j.ecolecon.2015.06.024

Abstract

Benefiting from access to detailed data on the federally run National Flood Insurance Program for the entire state of Georgia, USA, we analyze residential flood insurance purchasing behavior in that state over more than three decades (1978–2010). The demand for flood insurance on an extensive margin, based on take-up rates, is found to be relatively price inelastic. Aligned with the behavioral economics literature, recent flood events temporarily increase purchases, but this effect fades after 3 years. We also find that the proportion of developed area in floodplains has a significant positive impact on insurance take-up rates. Contrary to what is often assumed, we do not find evidence that insurance purchase and mitigation efforts are substitutes. Educated individuals, individuals over the age of 45, and African-Americans are, all else equal, more likely to purchase flood insurance.

Copyright/Permission Statement

© 2015. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

floods, disaster insurance, NFIP, race, georgia

Embargo Date

7-10-2017

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Date Posted: 27 November 2017

This document has been peer reviewed.