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Wildfire Insurance, Information, and Self-Protection

Author

Listed:
  • Judson Boomhower
  • Meredith Fowlie
  • Andrew J. Plantinga

Abstract

Like other climate-related disasters, wildfires are intensifying. Property owners can reduce their vulnerability to wildfire losses but are not well informed about the costs and benefits of available self-protection investments. Technological advances mean that insurers are increasingly able to monitor household mitigation behavior. We revisit the problem of self-protection from risk in a setting where households have incomplete insurance and limited information about self-protection investments. Insurer discounts for self-protection generate additional value by informing households about self-protection investments that also reduce uninsured losses. This information provision increases the responsiveness of self-protection to ex post disaster assistance, with implications for optimal government transfers.

Suggested Citation

  • Judson Boomhower & Meredith Fowlie & Andrew J. Plantinga, 2023. "Wildfire Insurance, Information, and Self-Protection," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 310-315, May.
    • Handle: RePEc:aea:apandp:v:113:y:2023:p:310-15
    DOI: 10.1257/pandp.20231104
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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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