The Democrat Disaster: Hurricane Exposure, Risk Aversion and Insurance Demand

77 Pages Posted: 21 Jan 2020 Last revised: 30 Jun 2020

See all articles by Raluca L. Pahontu

Raluca L. Pahontu

London School of Economics & Political Science (LSE)

Date Written: January 2020

Abstract

How do voters respond to heightened risk? Dominant theories expect accountability issues to surface or distributional conflict to intensify once threats become salient. Unsatisfactorily, these accounts rely on compound treatment effects of exposure not only to risk but also to direct losses or self-selection into unfortunate circumstances. To circumvent this, I use difference-in-differences estimates of hurricane nearly-hit areas in the US to study the effect of risk on vote choice. I find that Democrats' vote share decreases in both House and Senate races between 2002-2014 following a near-miss. Conventional explanations related to religiosity, authority, or competence fail to explain this effect. Instead, I propose Republican gains are driven by voters' spending on private insurance and increased willingness to take risks when spared from disaster. I therefore advance an alternative explanation of voting under risk by relying on novel data on hurricane trajectories, precinct electoral returns, risk-aversion, and private insurance inquiries. These results are politically meaningful not least because US general elections follow closely after the hurricane season.

Keywords: causal inference, voter behaviour, risk, natural disaster, insurance, uncertainty

JEL Classification: D72, D81, H20, Q54, P16, C23, C55, D60, P18

Suggested Citation

Pahontu, Raluca L., The Democrat Disaster: Hurricane Exposure, Risk Aversion and Insurance Demand (January 2020). Available at SSRN: https://ssrn.com/abstract=3515282 or http://dx.doi.org/10.2139/ssrn.3515282

Raluca L. Pahontu (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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