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Media type:
E-Article
Title:
Flood Risk and Salience: New Evidence from the Sunshine State
Contributor:
Bakkensen, Laura A.;
Ding, Xiaozhou;
Ma, Lala
Published:
Wiley, 2019
Published in:
Southern Economic Journal, 85 (2019) 4, Seite 1132-1158
Language:
English
DOI:
10.1002/soej.12327
ISSN:
0038-4038;
2325-8012
Origination:
Footnote:
Description:
A growing literature finds evidence that flood risk salience varies over time, spiking directly following a flood and then falling off individuals' cognitive radar in the following years. In this article, we provide new evidence of salience exploiting a hurricane cluster impacting Florida that was preceded and followed by periods of unusual calm. Utilizing residential property sales across the state from 2002 through 2012, our main estimate finds a salience impact of −8%, on average. The salience effect persists when we base estimation only on spatial variation in prices to limit confounding from other simultaneous changes due to shifting hedonic equilibria over time. These effects range from housing prices decreases of 5.4–12.3% depending on the year of sale. Understanding flood risk salience has important implications for flood insurance and disaster policy, the benefits transfer literature, and, more broadly, our understanding of natural disaster resilience.JEL Classification: Q51, Q54, R21