Willingness to Pay for Low Probability, Low Loss Hazard Insurance
We estimate the willingness to pay for low probability, low loss hazard insurance with the contingent valuation method. The application is to household hurricane evacuation cost insurance – a new product for which there is currently no market. We find that a majority of respondents would not purchase the product at even the lowest price. In general, respondents are rational in response to the probability and costs of a evacuation. Respondents are not likely to pay anything for evacuation cost insurance.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Thelma C. Raley Hall, Boone, North Carolina 28608|
Web page: http://www.business.appstate.edu/departments/economics/
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- Philip Ganderton & David Brookshire & Michael McKee & Steve Stewart & Hale Thurston, 2000. "Buying Insurance for Disaster-Type Risks: Experimental Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 271-289, May.
- Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
- McClelland, Gary H & Schulze, William D & Coursey, Don L, 1993. " Insurance for Low-Probability Hazards: A Bimodal Response to Unlikely Events," Journal of Risk and Uncertainty, Springer, vol. 7(1), pages 95-116, August.
- Ganderton, Philip T, et al, 2000. " Buying Insurance for Disaster-Type Risks: Experimental Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 271-89, May.
- John C. Whitehead, 2000. "“One Million Dollars a Mile? The Opportunity Costs of Hurricane Evacuation,”," Working Papers 0005, East Carolina University, Department of Economics.
- Trudy Ann Cameron, 1991. "Interval Estimates of Non-Market Resource Values from Referendum Contingent Valuation Surveys," Land Economics, University of Wisconsin Press, vol. 67(4), pages 413-421.
- John C. Whitehead & Todd L. Cherry, 2004. "Mitigating the Hypothetical Bias of Willingness to Pay: A Comparison of Ex-Ante and Ex-Post Approaches," Working Papers 04-21, Department of Economics, Appalachian State University.
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