Does Climate Change News Inform Flood Insurance Take-Up?

Yi Huang is an assistant professor of Economics at Nanjing Audit University.  She received her Ph.D. in Economics in 2020 from the University of Illinois at Urbana-Champaign (UIUC). Her research interest includes urban economics, environmental economics and real estate economics. Her current research focuses on the impact of natural disasters and climate change on market behaviors (e.g., housing price and insurance take-up). Her work has been published in journals including PNAS, Regional Science and Urban Economics, Journal of Real Estate Finance and Economics, among others.

Despite the rising flood risks exacerbated by climate change, the US's flood insurance take-up remains very low. This paper provides novel evidence on whether and how news coverage of climate change affects flood insurance decisions in the US. Our estimates provide robust evidence of an overall increase in the month-over-month growth rate in flood policies to the innovations in the news coverage (i.e., the unexpected change in coverage intensity), mainly driven by responses from the non-coastal counties. Sociodemographic heterogeneity in responses is also found. We also pay close attention to confirmation bias, which provides important information to assess whether individuals interpret climate news from a news outlet that shares the same political view differently.