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Social and Behavioral Sciences

2015

Floods

Articles 1 - 1 of 1

Full-Text Articles in Insurance

What Drives Households To Buy Flood Insurance? Evidence From Georgia, Ajita Atreya, Susana Ferreira, Erwann Michel-Kerjan Sep 2015

What Drives Households To Buy Flood Insurance? Evidence From Georgia, Ajita Atreya, Susana Ferreira, Erwann Michel-Kerjan

Finance Papers

Benefiting from access to detailed data on the federally run National Flood Insurance Program for the entire state of Georgia, USA, we analyze residential flood insurance purchasing behavior in that state over more than three decades (1978–2010). The demand for flood insurance on an extensive margin, based on take-up rates, is found to be relatively price inelastic. Aligned with the behavioral economics literature, recent flood events temporarily increase purchases, but this effect fades after 3 years. We also find that the proportion of developed area in floodplains has a significant positive impact on insurance take-up rates. Contrary to what ...