Redistributional Effects of the National Flood Insurance Program
Resources for the Future Discussion Paper No. 11-14
26 Pages Posted: 16 Mar 2011 Last revised: 29 May 2013
Date Written: March 14, 2011
Abstract
This study examines the redistributional effects of the National Flood Insurance Program (NFIP) using a national database of premium, coverage, and claim payments at the county level between 1980 and 2006. Measuring progressivity as the departure from per capita county income proportionality, we find that NFIP premiums are typically proportional if the time horizon is extended beyond a single year, while claim payments are moderately progressive over all time horizons studied. The net effect of the NFIP program, defined as indemnity payments net of premiums, indicates that NFIP is proportional or at most mildly progressive, while the effect is modest. In sum, we find no evidence that the NFIP disproportionally advantages richer counties.
Keywords: NFIP, progressivity, departure from proportionality
JEL Classification: D31, G22, Q54, R38
Suggested Citation: Suggested Citation
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