Title
Averting and insurance decisions in the Wildland-Urban interface: Implications of survey and experimental data for wildfire risk reduction policy
Publication Date
2006
Document Type
Article
Abstract
When confronted by catastrophic wildfire risk, homeowners simultaneously allocate resources between insurance and averting activities. Expected utility theory suggests that complete insurance coverage precludes investment in averting activities. However, when potential losses include a significant nonmarket component, optimal choice includes both. To investigate this issue, the authors analyze a unique combination of contingent valuation and experimental data. Both settings include a split-sample treatment to test the influence of wildfire risk zone information. The authors find that amenity values, subjective risk, averting efficacy perception, and demographic factors influence both willingness to pay and averting share and that risk information has the predicted ordering effect.
Original Citation
Talberth J., Berrens R.P., McKee M., Jones M. (2006). Averting and insurance decisions in the Wildland-Urban interface: Implications of survey and experimental data for wildfire risk reduction policy. Contemporary Economic Policy, 24(2), 203-223. https://doi.org/10.1093/cep/byj021
Identifier
Virtual Commons Citation
Talberth, John; Berrens, Robert P.; McKee, Michael; and Jones, Michael L. (2006). Averting and insurance decisions in the Wildland-Urban interface: Implications of survey and experimental data for wildfire risk reduction policy. In Economics Faculty Publications. Paper 1.
Available at: https://vc.bridgew.edu/econ_fac/1