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UID:20250815T082939EDT-8598EZgpaV@132.216.98.100
DTSTAMP:20250815T122939Z
DESCRIPTION:Katherine Wagner (Yale)\n	Date: January 10\, 2020\n	Time and Loca
 tion: 10:30 a.m.\, Leacock 429\n\nAbstract: \n	This paper studies social we
 lfare in markets for natural disaster insurance. I quantify frictions in u
 ptake\, test for adverse selection\, and estimate the welfare effects of p
 roposed policy reforms by developing a model of natural disaster insurance
  markets and compiling new data. The paper has three main findings. First\
 , willingness to pay for natural disaster insurance is remarkably low. In 
 the high-risk flood zones throughout all U.S. Atlantic and Gulf Coast stat
 es\, fewer than 60% of homeowners purchase flood insurance even though sub
 sidized premia are only two-thirds of their own expected payouts. Second\,
  homeowners select into insurance based on observable differences in house
 s' defensive investments against natural disasters (i.e.\, adaptation)\, b
 ut not on private information about risk. Exploiting house-level variation
  in flood insurance prices and construction codes reveals that requirement
 s to elevate newly constructed homes reduce insurer costs by 31% and insur
 ance demand by 25%. Asymmetric information between homeowners and insurers
 \, however\, does not affect average payouts. Third\, ignoring how frictio
 ns\, such as risk misperception\, distort demand understates the welfare c
 ost of currently proposed price increases and changes the sign of the pred
 icted welfare ffect. In contrast\, enforcing a natural disaster insurance 
 mandate increases social welfare.\n
DTSTART:20200110T153000Z
DTEND:20200110T170000Z
LOCATION:Leacock 429\, Leacock Building\, CA\, QC\, Montreal\, H3A 2T7\, 85
 5 rue Sherbrooke Ouest
SUMMARY:Katherine Wagner (Yale)\, “Adaptation and Adverse Selection in Mark
 ets for Natural Disaster Insurance”  
URL:/economics/channels/event/katherine-wagner-yale-ad
 aptation-and-adverse-selection-markets-natural-disaster-insurance-305534
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