Flooded Social Connections

Abstract

Does salient information on social media influence individuals’ economic decisions and beliefs? Using aggregated data from Facebook and a difference-in-differences strategy, I show that individuals who are socially connected to someone affected by Hurricane Harvey are more likely to purchase flood insurance policies after the event. This effect is stronger in areas at higher risk of flooding. Being socially connected to someone affected by Hurricane Harvey also influences individuals’ perceptions of global warming.

Social learning about climate risks

“…Our work formalizes the information impact of climate disasters, aligning with Gallagher (2014) and Muller & Hopkins (2019), embedding it within a social network structure. Additionally, we extend the finding that social connectedness mediates responses to remote disasters (Hu, 2022;Ratnadiwakara, 2021), which had previously focused on bilateral relationships without explicitly modeling the social context.…”

“…A flooded peer county j 's hurricane experience will indirectly impact county i' s outcome to the extent of its relative importance in i 's total social connections to all counties. This is different from using the average SCI to flooded areas as the mediator of flood events on flood insurance take‐up in unflooded areas (Hu, 2022; Ratnadiwakara, 2021) for two reasons. First, the mediator approach focuses on a bilateral relationship between two counties without a social context.…”

Climate risk perceptions and demand for flood insurance

“…Gallagher (2014) shows that flood insurance take‐up increases among households in nonflooded communities when they learn about floods in communities that are part of the same television media market. Hu (2022) and Ratnadiwakara (2021) show that flood insurance take‐up increases among counties that are geographically distant but socially more connected via Facebook to counties that recently experienced a flood disaster. These papers argue that this behavior is a result of social networks acting as an attention trigger that increases the salience of flood risk among counties more socially connected to the disaster county compared to less socially connected ones.…”