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

See all articles by Okmyung Bin

Okmyung Bin

East Carolina University - Department of Economics

John A. Bishop

East Carolina University - College of Business

Carolyn Kousky

Resources for the Future

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

Bin, Okmyung and Bishop, John A. and Kousky, Carolyn, Redistributional Effects of the National Flood Insurance Program (March 14, 2011). Resources for the Future Discussion Paper No. 11-14, Available at SSRN: https://ssrn.com/abstract=1785486 or http://dx.doi.org/10.2139/ssrn.1785486

Okmyung Bin

East Carolina University - Department of Economics ( email )

Brewster Building
Greenville, NC 27858
United States

John A. Bishop

East Carolina University - College of Business ( email )

Department of Economics
Greenville, NC 27858-4353
United States

Carolyn Kousky (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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