For Those with Homeowners Insurance, the Relationship between the Likelihood and Number of Preparation Activities Undertaken and Deductible Coverage

Preevent Preparation: Coefficients (1)Window Protection: Estimated Parameters (2)Other Risk Reduction: Estimated Parameters (3)
Preparation outcome variable
  Flood insurance0.276***0.135***0.119***
  Experienced damage0.314***0.04150.111***
  Hundred year floodplain0.0550.036−0.039
  Distance to coast−0.0145−0.023**−0.007
  $0 to $500 deductible0.0720.0160.026
  $501 to $1,000 deductible−0.037−0.0170.029
  $1,001 to $2,500 deductible0.1060.0460.063
  > $2,500 deductible0.326**0.107*0.087*
  Hurricane Irene0.0190.123***−0.034
  Hurricane Isaac0.252**0.326***0.046
Selection stage
  Flood insurance0.245*
  Experienced damage0.048
  Hurricane Irene−0.148
  Hurricane Isaac0.183
  Known deductible−0.002
Inverse Mills ratio (λ)−1.152***
Censored observations66
Log likelihood−2,395.45−769.14−686.27
Wald/likelihood ratio χ2 (prob > χ2)76.44*** [0.00]180.97*** [0.00]87.19*** [0.00]
  • Note: (1) are the Heckman sample selection model results, (2) and (3) are probit models; each model was estimated via maximum likelihood. For Models (2) and (3) the values for the constant are not the marginal effect, but the coefficient estimate from the probit model. Numbers in square brackets are p-values. AIC, Akaike information criterion. “Don’t know” responses were excluded for window protection and other risk reduction as dependent variables. Regressions with the “don’t know” responses included were also estimated, and results do not differ materially from those presented here.

  • *, **, *** Statistical significance at the 10%, 5%, and 1% levels, respectively.