Abstract
Little is known about why individuals place either a high or a very low value on mitigating risks of disaster-type events, like floods. This study uses panel data methods to explore the psychological factors affecting probability neglect of flood risk relevant to the zero end-point of the probability weighting function in Prospect Theory, and willingness-to-pay for flood insurance. In particular, we focus on explanatory variables of anticipatory and anticipated emotions, as well as the threshold of concern. Moreover, results obtained under real and hypothetical incentives are compared in an experiment with high experimental outcomes. Based on our findings, we suggest several policy recommendations to overcome individual decision processes, which may hinder flood protection efforts.
| Original language | English |
|---|---|
| Pages (from-to) | 2514-2527 |
| Number of pages | 14 |
| Journal | Risk Analysis |
| Volume | 39 |
| Issue number | 11 |
| Early online date | 27 Jun 2019 |
| DOIs | |
| Publication status | Published - Nov 2019 |
Funding
This study received financial support from the Netherlands Organisation for Scientific Research (NWO) VIDI Grant 452.14.005. We thank Tim Polaszek for helping to implement the pretest. Michael Siegrist and two anonymous referees provided valuable suggestions for the article. We are grateful to Thomas Epper and IVM colleagues for their comments on the experiment design.
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 11 Sustainable Cities and Communities -
SDG 13 Climate Action
Keywords
- Flood insurance demand
- incentives
- probability neglect
- prospect theory
- risk preferences
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