Climate Risk and Beliefs in New York Floodplains

89 Pages Posted: 4 Aug 2020 Last revised: 19 May 2022

See all articles by Matthew Gibson

Matthew Gibson

Williams College

Jamie T. Mullins

University of Massachusetts Amherst


Applying a difference-in-differences framework to a census of residential property transactions in New York City 2003-2017, we estimate the price effects of three flood risk signals: 1) the Biggert-Waters Flood Insurance Reform Act, which increased premiums; 2) Hurricane Sandy; and 3) new floodplain maps reflecting three decades of climate change. Estimates are negative for all three signals and some are large: properties included in the new floodplain after escaping flooding by Sandy experienced 11 percent price reductions. We investigate possible mechanisms, including selection of properties into the market and residential sorting. Finding no evidence for these, we develop a parsimonious theoretical model that allows decomposition of our reduced-form estimates into the effects of insurance premium changes and belief updating. Results suggest the new maps induced belief changes comparable to those from insurance reform.

Keywords: beliefs, updating, climate change, flood risk

JEL Classification: Q54, Q58, R30, G22

Suggested Citation

Gibson, Matthew and Mullins, Jamie, Climate Risk and Beliefs in New York Floodplains. IZA Discussion Paper No. 13553, Available at SSRN:

Matthew Gibson (Contact Author)

Williams College

Williamstown, MA 01267
United States

Jamie Mullins

University of Massachusetts Amherst

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