Going Underwater? Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics

• 成果类型: Article
• 署名作者: Bakkensen, Laura A.; Barrage, Lint
• 署名单位: University of Arizona; University of California System; University of California Santa Barbara; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhab122
• 发表日期: 2022
• 页码: 3666
• 关键词: sea-level rise; CLIMATE-CHANGE; contingent valuation; MARKET; experiences; responses; disaster; BEHAVIOR; number; MODEL

摘要

How do climate risk beliefs affect coastal housing markets? This paper provides theoretical and empirical evidence. First, we build a dynamic housing market model and show that belief heterogeneity can reconcile prior mixed evidence on flood risk capitalization. Second, we implement a door-to-door survey in Rhode Island, finding significant flood risk underestimation and sorting based on risk perceptions and amenity values. Third, we estimate that coastal prices exceed fundamentals by 6%-13% in our benchmark area, with potentially higher overvaluation in other locations. Finally, we quantify both allocative inefficiency and distributional consequences arising from flood risk misperceptions and insurance policy reform.