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Willingness to Pay for Hurricane-Resistant Home Improvement Programs: a Choice Experiment in Northeastern and Mid-Atlantic United States

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Abstract

We conducted a choice experiment to investigate household preferences for a home improvement program that would make housing structures more resistant to hurricanes in Northeastern and Mid-Atlantic United States. The experimental design included four attributes with varying levels: certified home inspection, matching grant for home improvements, conditional insurance premium discount, and program fee. Respondents’ choices were analyzed using scale-heterogeneity multinomial logit models in order to control for respondents’ behavioral heterogeneity. Findings indicate that households would value a program that provides incentives in the form of matching grants for hurricane-resistant home improvements and conditional insurance discounts. Policy implications are discussed.

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Notes

  1. Some examples of improved construction methods and retrofitting techniques for roof systems include installing new hurricane-rated roof coverings, exterior strengthening of the roof deck, exterior secondary water barriers, reinforcing roof-to-wall connections, bracing gable ends, reinforcing soffits, and applying interior hurricane spray foam adhesive for interior secondary water barrier and roof deck strengthening.

  2. See http://www.mysafefloridahome.com for further details about the MSFH program.

  3. The choice sets were designed using JMP Statistical Discovery software.

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Acknowledgements

We acknowledge support from the National Science Foundation (Award #0838683, #1204762), Florida Division of Emergency Management (DEM), and International Hurricane Research Center at the Florida International University, Miami, Florida. Nadia Seeteram, Eric Van Vleet, Subrina Tahsin, Fan Jiang, Sisi Meng and Chiradip Chatterjee have provided excellent research support. We are also thankful to survey participants and GFK (formerly Knowledge Networks) staff members who implemented the survey. However, the opinions expressed here are solely of the authors.

Author information

Authors and Affiliations

  1. Department of Economics, Fairfield University, 1073 North Benson Rd, Fairfield, CT, 06824, USA

    William F. Vásquez

  2. Department of Earth and Environment and Department of Economics, Florida International University, AHC5-370, University Park Campus, 11200 SW 8th Street, Miami, FL, 33199, USA

    Pallab Mozumder

Authors
  1. William F. Vásquez
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Corresponding author

Correspondence to William F. Vásquez.

Appendix A Description and Example of Choice Experiment

Appendix A Description and Example of Choice Experiment

The recent hurricane Sandy has devastated communities across Northeastern US and similar hurricanes may be inevitable in the future. As such, coastal communities are developing innovative technologies, products, policies, and public engagement strategies to minimize the loss of life and property from future hurricanes.

Suppose that there is a proposal to implement a public program aimed to make housing structures and buildings more resistant to hurricanes. This program will consist of three components: 1) home inspections, 2) rebates for mitigation improvements of your home, and (3) insurance discounts conditional to home improvements.

If you decide to register in the program, you will have your home inspected by an expert who will recommend home improvements to make your housing unit more resistant to hurricanes. The inspector will also provide you with a voucher that you may use to obtain a rebate (50% of your costs) if you decide to follow the inspector’s recommendations and make those improvements. Finally, you will be entitled to a home insurance discount if you decide to make the recommended home improvements. A program fee will be charged to make this program sustainable. Keep in mind that, if you decide to pay the program fee, that money will not be available for other expenditures (for example, food, cloth, etc.) in your home.

Against this backdrop consider the following choice card involving your home inspection, mitigation and insurance options with corresponding program fee and indicate your preferred choice.

Please review the following information and make a selection or choice at the bottom.

 

Option 1

Option 2

Opt Out

Inspection

Roof, doors, and windows

Roof, doors, windows, skylights, garage doors, vents, foundation, roof-to-walls connections, soffits, and water penetration

None of Them

Mitigation

A rebate of 50% of the cost of home improvements recommended by inspectors and made by authorized contractors, with a maximum rebate of $5000

A rebate of 50% of the cost of home improvements recommended by inspectors and made by authorized contractors, with a maximum rebate of $10,000

Insurance

30% discount in your insurance premium when home improvements recommended by inspectors are made

15% discount in your insurance premium when home improvements recommended by inspectors are made

Program Fee

$ 1000

$ 2000

Would you choose option 1, option 2 or would you opt out?

  1. 1.

    Option 1

  2. 2.

    Option 2

  3. 3.

    Opt out

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Vásquez, W.F., Mozumder, P. Willingness to Pay for Hurricane-Resistant Home Improvement Programs: a Choice Experiment in Northeastern and Mid-Atlantic United States. EconDisCliCha 1, 263–276 (2017). https://doi.org/10.1007/s41885-017-0016-z

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  • DOI: https://doi.org/10.1007/s41885-017-0016-z

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