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The B.E. Journal of Economic Analysis & Policy

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Volume 17, Issue 4


Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Does the National Flood Insurance Program Have Redistributional Effects?

Okmyung Bin
  • Corresponding author
  • Department of Economics, East Carolina University, Brewster A-427, Greenville, NC 27858-4353, USA
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  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ John Bishop
  • Department of Economics, East Carolina University, Brewster A-427, Greenville, NC 27858-4353, USA
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Carolyn Kousky
  • Risk Management and Decision Processes Center, Wharton School, University of Pennsylvania, Philadelphia, PA 19104, USA
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Published Online: 2017-09-01 | DOI: https://doi.org/10.1515/bejeap-2016-0321


This study examines possible redistributional effects of the National Flood Insurance Program (NFIP), using a nationwide database of flood insurance policies and claims between 2001 and 2013 from the Federal Emergency Management Agency. Applying methods from the tax and transfer progressivity literature, we use the departure from per capita income proportionality at the zip code level as our measure of progressivity. Our findings indicate that premiums as a percentage of coverage purchased are regressive: premium shares are larger than income shares for lower-income zip codes. Payouts, however, also as a percentage of coverage purchased, are progressive, meaning lower-income zip codes receive a larger portion of claims paid. Overall net premiums (premiums – payouts) divided by coverage are also regressive. Our findings are driven by certain aspects of the current rate structure of the NFIP, as well as how income is related to risk. We discuss potential policies to provide assistance to lower-income households in purchasing flood insurance.

Keywords: Gini index; NFIP; redistributive effect; departure from proportionality

JEL Classification: D31; G22; Q54; R38


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About the article

Published Online: 2017-09-01

Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 17, Issue 4, 20160321, ISSN (Online) 1935-1682, DOI: https://doi.org/10.1515/bejeap-2016-0321.

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