We focus on homeowners who suffered damage from Hurricane Maria in Puerto Rico with the following research questions:
- To what extent was the community level of income inequality for these homeowners related to their decision to adopt homeowners insurance?
- To what extent did the community level of income inequality for homeowners influence the relationship between their incomes and decisions to adopt homeowners insurance?
Methods: Using Individual Assistance Housing Registrant data collected by FEMA after Hurricane Maria (N=265,807), we employed four nested multi-level logistic regressions to estimate household probabilities of adopting HI, given the conditions of sequentially added predictors of i) null; ii) household income and other housing characteristics; iii). Gini-index of the Census-tracts where the households were located; iv) the interaction term of income and Gini-index.
Results: First, our simplest random-intercept model found significant variation in HI adoption probabilities across 881 census tracts (Median Odds Ratio [MOR] = 2.28, 95% Confidence Interval [CI]: 2.17, 2.38). Second, when adding individual household and housing characteristics, households with higher incomes were significantly more likely to adopt HI (Odds Ratio [OR] = 1.55; 95% CI: 1.53, 1.47). Third, the addition of income inequalities in terms of Gini quartile ranges showed that relative to the lowest range, households in the three higher-range census tracts were less likely to adopt HI (OR = 0.85/ 0.71/ 0.73 respectively; 95% CI: 0.74, 0.96/ 0.62, 0.81/ 0.73, 0.83 respectively). Finally, the addition of a possible interaction between income and income inequality showed that income inequality significantly influenced the relationship between income and HI adoption behavior (OR = 1.04/ 1.06/ 1.12 respectively; 95% CI: 1.01, 1.07/ 1.03, 1.09/ 1.09, 1.16 respectively).
Conclusions and Implications: Income inequality played different roles for poor and rich: impeding HI adoption behavior for low-income households while facilitating such a behavior for high-income households. Policy formulation should consider public-private partnerships to address HI affordability for those low-income households most vulnerable to housing damage.