Social interactions and households' flood insurance decisions

• 成果类型: Article
• 署名作者: Hu, Zhongchen
• 署名单位: The Chinese University of Hong Kong, Shenzhen
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2022.02.004
• 发表日期: 2022
• 页码: 414-432
• 关键词: flood insurance; social learning; peer effects; social networks

摘要

Flooding is the most costly natural disaster faced by US households, yet policymakers are puzzled by the low take-up rates for flood insurance. Leveraging novel transaction-level data, this paper studies the influence of social interactions on households' insurance de-cisions. I show that households increase flood insurance purchases by 1-5 percent when their geographically distant friends are exposed to flooding events or to campaigns for flood insurance. These exogenous shocks to far-away friends should not affect local house-holds' own insurance decisions except through peer effects. I provide evidence suggesting that social interactions facilitate learning through information dissemination and attention triggering. (c) 2022 Elsevier B.V. All rights reserved.