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Please use this identifier to cite or link to this item: http://hdl.handle.net/1843/54214
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dc.creatorGilvan Ramalho Guedespt_BR
dc.creatorRodrigo Raadpt_BR
dc.date.accessioned2023-05-30T20:37:08Z-
dc.date.available2023-05-30T20:37:08Z-
dc.date.issued2018-
dc.citation.issueXXI Encontro Nacional de Estudos Populacionaispt_BR
dc.citation.spage1pt_BR
dc.citation.epage21pt_BR
dc.identifier.urihttp://hdl.handle.net/1843/54214-
dc.description.resumoThis paper proposes a two-period model of private insurance under climate uncertainty with endogenous prices to explain how the coexistence of agents’ heterogeneity regarding ability to predict future occurrence of natural events may deviate market prices from the fundamentals, leading to reduction in social welfare in the long run. Based on survey data related to self-insurance against floods and perception on change in local climate parameters, coupled with historical meteorological data from local weather stations, we identified the existence of a group of individuals making persistent errors in the anticipation of climate events. Econometric models further suggest that the probability of belonging to this group varies significantly by sociodemographic and geophysical attributes of the sampled respondents. This empirical finding of heterogeneity within and between groups helps explain why there is no market supply of information on natural events. The absence of firms providing this type of information occurs because price discrimination via product differentiation is economically unfeasible in private markets. Therefore, we propose a theoretical model with heterogeneous agents and taxation to finance a public technology providing information on natural events. Results from our insurance model with incomplete markets show that the group with accurate expectations price the insurance as the fundamentals, while agents with inaccurate expectations distort insurance prices in the long run. The closed form solution suggests that agents making persistent mistakes on the process of anticipation of climate events are not driven out from the market. By including a central planner providing a technology for access to accurate information, our example illustrates that public intervention (via taxation) would only be feasible if public expenditure in the provision of this technology did not exceed 9.188% of the aggregate income earned by agents with inaccurate expectations. This threshold is computed based on a relative measure of social welfare that is robust to scale transformations.pt_BR
dc.languageporpt_BR
dc.publisherUniversidade Federal de Minas Geraispt_BR
dc.publisher.countryBrasilpt_BR
dc.publisher.departmentFCE - DEPARTAMENTO DE DEMOGRAFIApt_BR
dc.publisher.initialsUFMGpt_BR
dc.relation.ispartofADEP - Associação brasileira de estudos populacionaispt_BR
dc.rightsAcesso Abertopt_BR
dc.subjectNatural disasterspt_BR
dc.subjectClimate changept_BR
dc.subjectErrors in climate predictionpt_BR
dc.subjectPrivate insurance model under uncertaintypt_BR
dc.subjectHeterogeneity in agents’ priorspt_BR
dc.subject.otherDesastres ambientaispt_BR
dc.subject.otherMudanças climáticaspt_BR
dc.subject.otherMudanças climáticas - Previsãopt_BR
dc.titleWelfare consequences of persistent climate prediction errors on the insurance markets against natural hazardspt_BR
dc.typeArtigo de Eventopt_BR
dc.url.externahttp://www.abep.org.br/publicacoes/index.php/anais/article/view/2972pt_BR
dc.identifier.orcidhttps://orcid.org/0000-0001-8231-238Xpt_BR
dc.identifier.orcidhttps://orcid.org/0000-0003-3974-3517pt_BR
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