A City under Water: A Geospatial Analysis of Storm Damage, Changing Risk Perceptions, and Investment in Residential Housing

• DOI: 10.1086/695611
• Publication Date: 2017-11-10T18:46:06Z
• Authors: Shawn J. McCoy; Xiaoxi Zhao
• Keywords: Investment; Risk Perception

We examine the relationships between hurricanes, flood risk saliency, and residential property investment. Our analysis utilizes data detailing capital investment projects in homes matched to spatial delineating locations of structures damaged by Hurricane Sandy. Utilizing a difference-in-differences estimation strategy, we estimate significant increase probability homeowner invests building located area. However, fail detect statistically change rate among properties outside these areas. investigate mechanisms through which hurricane may influence households' perceptions modeling changes out zones restricting attention set that failed experience any storm damage. Model results suggest while recent perceived risks, path damage is an important mechanism driving changes.