Data and Code for: Adaptation and Adverse Selection in Markets for Natural Disaster Insurance

Principal Investigator(s): View help for Principal Investigator(s) Katherine Wagner, Stanford University

Name	File Type	Size	Last Modified
floods_repository			04/23/2025 05:10:PM

Project Citation:

Wagner, Katherine. Data and Code for: Adaptation and Adverse Selection in Markets for Natural Disaster Insurance. Nashville, TN: American Economic Association [publisher], 2025. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-04-28. https://doi.org/10.3886/E138561V1

Project Description

Summary:

This paper quantifies frictions in uptake, tests for adverse selection, and analyzes welfare effects of proposed reforms in natural disaster insurance markets. I find that willingness to pay is remarkably low. In high-risk flood zones, fewer than 60% of homeowners purchase flood insurance even though premia are only two-thirds of own costs. Estimating flood insurance demand and cost elasticities using house-level variation in premia from recent U.S. Congressional reforms reveals that these homeowners select into insurance based on observable differences in adaptation, but not private information about risk. These findings change the sign of predicted welfare effects of proposed policies.

Funding Sources: Cowles Foundation ; Stanford Institute for Economic Policy Research

Scope of Project

Subject Terms: Freedom of Information Act ; Restricted Use Microdata

JEL Classification:
      D82 Asymmetric and Private Information; Mechanism Design
      H50 National Government Expenditures and Related Policies: General
      Q54 Climate; Natural Disasters and Their Management; Global Warming

Geographic Coverage: 20 Atlantic and Gulf Coast US states: Alabama, Connecticut, Delaware, Florida, Georgia, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, and Virginia

Time Period(s): 1/1/2001 – 12/31/2017 (2001-2017)

Universe: Houses in high-risk flood zones in the 20 Atlantic and Gulf Coast US states

Data Type(s): administrative records data; geographic information system (GIS) data; program source code

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Published Versions

V1 [2025-04-28]

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