Peer Reviewed Publications
The crop insurance demand response to the Wildfire and Hurricane Indemnity Program Plus - Previous literature has suggested that ad hoc disaster aid can crowd out demand for residential flood insurance. However, this phenomenon remains relatively unexplored in the agriculture insurance sector. In this paper, we focus on the most recent ad hoc disaster aid program for US agricultural producers, the Wildfire and Hurricane Indemnity Program Plus (WHIP+). Using county‐level data on WHIP+ payments, we find support for the program crowding out demand for crop insurance. However, we find the issue to be nuanced, noting that the demand response to WHIP+ payments is subject to heterogeneity across several dimensions including commodity, insurance plan, and coverage level.
Hedonic property prices and coastal beach width - Previous research suggests that coastal housing values capitalize the quality of nearby beaches but note potential problems related to measurement errors and reverse causation due to beach replenishment. We offer the first hedonic analysis of communities not engaged in beach replenishment, obviating concern over reverse causation. Statistical evidence supports hedonic specifications that account for proximity to the shoreline, though marginal willingness to pay (WTP) varies with the specification. Using an instrumental variables approach, we find significant downward bias in ordinary least squares estimates of marginal WTP derived from the sale of vacant lots compared to two-stage least squares estimates on the same vacant lots. Notably, we do not find evidence of the same downward bias in WTP derived from the sale of existing homes.
Willingness to Pay for Multi-peril Hazard Insurance - Increasing the number of insured assets in high-risk areas can help reduce the need for federal disaster aid and help communities rebuild quicker following a disaster event. Offering a bundled multi-peril homeowners’ insurance product may be one way to do this. Using individual-level survey data, we assess demand for a hypothetical multiperil insurance product and estimate a mean annual willingness to pay of $4,397. Both quantitative and qualitative analysis point to cost being the primary concern for adoption, however, reducing cognitive burden and uncertainty in the claims filing process appear to be important factors that appeal to homeowners.
Flood Insurance Market Penetration and Expectations of Disaster Assistance - Concern over resilience to natural disasters often focuses on moral hazard; expectations of disaster assistance may lead households in hazard-prone communities to forego insurance. This has been dubbed “charity hazard” in the literature on natural disasters. We examine flood insurance uptake using household level survey data and employ instrumental variables (related to local history of aid distribution and political economy) to address endogeneity of individual expectations of eligibility for disaster assistance. To avoid potential problems with reverse causation, we drop any households that could have received payments in the past (triggering mandatory flood insurance purchase). We find coastal households that exhibit positive expectations of disaster aid eligibility are 25 to 42 percent less likely to hold flood insurance. We estimate that charity hazard could be responsible for 817,000 uninsured homes in the United States corresponding to a loss of $526 million in forgone annual revenue for the National Flood Insurance Program.
How Has the COVID-19 Pandemic Affected Outdoor Recreation in the U.S.? A Revealed Preference Approach - This study examines the effects of the COVID-19 pandemic on outdoor recreation trips and values using revealed preference data in the context of travel cost method. Demand models are estimated using data on pre- and postpandemic trips reported in a nationwide survey of recreation participants. The models incorporate related subjective risk perceptions as postpandemic measures of site quality and account for household-level factors, pre-existing conditions, and risk tolerance. Our results suggest that the pandemic had negative effects on recreation visits and values, with risk-tolerant households and households with pre-existing conditions taking more trips.
Risk Perceptions and Flood Insurance:Insights from Homeowners on the Georgia Coast - Scholars highlight a wide array of factors that can influence individual decision-making under risk. Utilizing survey data, we explore many potential factors that affect risk perception and protective behaviors. Our focus is on coastal Georgia, which has lower historical risk relative to the rest of the Southeast U.S., and which many people perceive as relatively safe, but was recently adversely affected by two major storms. The results indicate a majority of coastal residents expect coastal storms and other hazards to be worse in the future. The regression results suggest perceived damages, risk tolerance, wealth exposure, and flood zone are robust determinants of flood insurance purchase. Other factors, like flood zone awareness and attitudes towards community risk management initiatives—like shoreline armoring, beach replenishment, and coastal retreat—are also indicated to have a high correlation with flood insurance purchase.
Food Waste and Food Retail Density - This paper examines the relationship between food retail density and municipal solid waste. We test for correlations between the volume of solid waste and the number of food-at-home retailers (e.g., grocery stores) and food-away-from-home retailers (e.g., restaurants) at the county level in the state of Mississippi over 2007–2012. Since food scraps comprise the largest share of post-recycling municipal solid waste in the United States, we control for the overall level of economic activity to account for other sources of solid waste, as well as demographic factors, county, and time effects. We find that increases in food-at-home retailer density are negatively correlated with solid waste volume. Conversely, we find that increases in the number of food-away-from-home retailers lead to more waste. While we do not explicitly investigate the mechanisms, we discuss possible avenues such as increased food access in the case of food at home, and increased portion sizes and substitutability in the case of food away from home.
Working Papers
Flood risk perceptions: Accuracy, determinants, and the role of probability weighting - This study analyzes survey data of US east coast homeowners to characterize accu- racy and determinants of homeowner flood risk (mis)perceptions. Using an array of instruments, we assess subjective risk perceptions and compare them to objective risk estimates. Reduced-form regressions suggest flood experience, worry, coastal tenure, education, primary homeownership, income, and wealth influence relative perceptions of risk. Common probability weighting functions do not fit the divergence in risk per- ceptions, suggesting that the source of the probability distortions is most likely due to misperceiving the true risk rather than a widespread behavioral heuristic.
Accounting for Uncertainty in Decision Weights for Experimental Elicitation of Risk Preferences - In the generalized expected utility framework, the multiplicative relationship between preferences and beliefs complicates the identification of risk preferences. In experimental or field settings, the respondent's decision weight (subjective probability) must be known to infer accurate risk preferences. We propose a novel Monte-Carlo based method for expressing uncertainty in the individual's decision weight as uncertainty in their inferred risk aversion coefficient. We implement this procedure on experimentally elicited risk preferences obtained via a mail survey and show that this procedure improves model fit when risk preferences are used as a determinant of behavior in a reduced-form model of insurance demand.
Hotelling Meets Crypto-Currency: Do Bitcoin Rents Follow Hotelling’s Rule? - Hotelling’s Rule is a central premise of natural resource economics, but there are difficulties in empirical assessment. We test Hotelling’s Rule using bitcoin rents. Similar to natural resources, new bitcoins enter the market solely through the efforts of agents expending computer resources. Bitcoin has a fixed resource stock, exhibits a fairly homogeneous technology, and aspects of investment behavior are observable over time. These factors make bitcoin an ideal test bed for Hotelling’s Rule. We find evidence of co-integration of bitcoin rents with several market indices, providing support for Hotelling’s Rule.
The Crop Insurance Demand Response to Premium Subsidies: Evidence from U.S. Agriculture - Premium subsidies are a common policy tool to promote crop insurance participation in many countries. However, the relationship between subsidies and demand is not entirely obvious given the variation in the use of subsidies and crop insurance participation within the international crop insurance landscape. Recognizing that much of the early work on crop insurance demand elasticities is suspect from a causal perspective, this study fills the existing gap by credibly identifying the demand response to changes in premium subsidies. Focusing on the U.S. Federal Crop Insurance Program, demand is modeled as a system of equations representing decisions at the intensive [coverage level] and extensive [net insured acres] margins. The model makes use of a novel identification strategy that leverages exogenous variation in government-set pricing policy to correct for endogeneity. Applying the model to 887,457 observations spanning 21 years suggests an inelastic response at both extensive and intensive margins to changes in producer-paid premium rates with the response to premium rates becoming increasingly more elastic as subsidies decrease. However, significant heterogeneity across commodity, production practices, policy type, and location are observed suggesting subsets of producers are likely to respond to changes in the cost of insurance in very different ways.
Other Articles
Crop Insurance at a Glance - A brief article written by me and my college Francis Tsiboe detailing some of the basics of U.S. crop insurance.