Risk Preferences, Risk Perceptions, and Demand for Flood Insurance

46 Pages Posted: 17 May 2011 Last revised: 29 May 2013

Daniel R. Petrolia

Mississippi State University - Department of Agricultural Economics

Craig E. Landry

University of Georgia - Department of Agricultural & Applied Economics; East Carolina University - Department of Economics

Keith H. Coble

Mississippi State University - Department of Agricultural Economics

Date Written: June 13, 2012

Abstract

We combine household-level data on the choice to purchase flood insurance with experiment-based risk preference data and subjective risk perception data. The sample covers a wide geographic area (the entire U.S. Gulf Coast and Florida’s Atlantic Coast) and includes individuals exposed to varying levels of risk. This work represents one of very few analyses to do so. Results indicate that our experiment-based measure of risk aversion over the loss domain positively and significantly correlates with the decision to purchase a flood policy, as do perceived expectations of hurricane damage, eligibility for disaster assistance, and credibility of insurance providers.

Keywords: flood insurance, Gulf Coast, risk preference, risk perception, survey

JEL Classification: D81, Q20

Suggested Citation

Petrolia, Daniel R. and Landry, Craig E. and Coble, Keith H., Risk Preferences, Risk Perceptions, and Demand for Flood Insurance (June 13, 2012). Available at SSRN: https://ssrn.com/abstract=1843326 or http://dx.doi.org/10.2139/ssrn.1843326

Daniel R. Petrolia

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

Craig Landry (Contact Author)

University of Georgia - Department of Agricultural & Applied Economics ( email )

Athens, GA 30602-7509
United States

East Carolina University - Department of Economics ( email )

Brewster Building
Greenville, NC 27858
United States

Keith H. Coble

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

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