The role of social norms in climate adaptation: Mediating risk

perception and ood insurance purchase

Alex Y. Lo*
Grifth School of Environment, Grifth University, Gold Coast, Queensland 4222, Australia
1. Introduction
Economic losses from extreme weathers are rising due to
climate change (Michel-Kerjan and Kunreuther, 2011; The World
Bank, 2010; Warner et al., 2009). Average temperatures are
projected to increase and rainfall patterns to change. Consequent-
ly, major ooding events are likely to become more intense and
frequent in the decades to come. This is expected to create
enormous costs to communities, in the forms of rescue operations,
loss of human life, asset damage, and business disruption
(McDonald, 2010). Governments at all levels are at pains to pay
the damage bill. This motivates the search for protective measures
against the risk of massive economic losses.
Flood insurance can supplement ofcial disaster relief schemes
and provide a foundation for economic resilience. It can spread the
risk of ooding across time and space and therefore reduce the
uncertainties associated with climate change impacts. Well-
designed insurance arrangements can protect communities
against insured damage created by oods and provide economic
incentives for voluntary efforts on risk mitigation. Flood insurance
thus plays an important role in climate adaptation and has
attracted renewed interests (Botzen et al., 2010; Linnerooth-Bayer
et al., 2009; Penning-Rowsell and Pardoe, 2012; The World Bank,
2010; Warner et al., 2009).
Lack of interest in insuring against natural hazards is one of the
barriers to climate adaptation at the household level. Some
residents of ood-prone areas are reluctant to voluntarily
purchase residential ood insurance cover even when it is
affordable and available (Handmer and Smith, 1989). Advances
in social sciences have identied a complex suite of social-
cognitive factors responsible for the failures to insure (Baumann
and Sims, 1978; Botzen et al., 2009; Botzen and van den Bergh,
2009; Kunreuther, 1996, 2006; Kunreuther and Slovic, 1978;
Laska, 1990; Zaleskiewicz et al., 2002), and more generally, the
failures to undertake adaptive behavioural adjustments (Adger,
2003; Alexander et al., 2012; Grothmann and Patt, 2005; Hulme,
2009; Raymond and Robinson, 2013; Wolf et al., 2010, 2013).
Differential perceptions of risk have been cited as a key factor
contributing to these failures.
However, evidence on the linkage between risk perception
and behaviour is far from consistent. The standard assumption is
a simple positive relationship between perceived risk and the
willingness to purchase ood insurance cover (Botzen and van
den Bergh, 2012; Kunreuther, 1996; Warner et al., 2009). As
argued by Kunreuther (1996, p. 176), if the risk is perceived to be
relatively high, then there is increased interest in purchasing a
policy. In reality, many individuals perceive the probability of a
natural hazard causing damage to their home as being
Global Environmental Change 23 (2013) 12491257
A R T I C L E I N F O
Article history:
Received 4 February 2013
Received in revised form 13 July 2013
Accepted 21 July 2013
Keywords:
Risk perception
Social norms
Flood insurance
Social amplication of risk
Climate adaptation
Natural hazards
A B S T R A C T
Flood insurance plays an important role in climate adaptation by recovering insured losses in the event
of catastrophic ooding. Voluntary adoption of ood insurance has been seen as a function of risk
perception that is shaped by social norms. This paper attempts to clarify the relationship between these
factors. It is based on a household survey conducted in the eastern cities of Australia and involving a total
of 501 randomly selected residents. Results of a path analysis show that the likelihood of having ood
insurance cover was associated with perceived social norms, but not perceived ood risk. In addition,
perceived norms and risk were statistically related to each other. It is concluded that social norms played
a mediating role between insuring decision and risk perception. Risk perception might inuence the
insuring decision indirectly through shaping perception of social norms. This implies that adaptive
behaviour is not necessarily a function of risk perception, but an outcome of its impacts upon the ways in
which the individuals situate themselves in their social circles or the society. There is a feedback process
in which individual perceptions of risk manifest as both a cause and effect, shaping and being shaped by
the socio-cultural context.
2013 Elsevier Ltd. All rights reserved.
* Tel.: +61 7 55527419; fax: +61 7 55528244.
E-mail address: alex.lo@grifth.edu.au
Contents lists available at ScienceDirect
Global Environmental Change
j o ur n al h o mepag e: www. el sevi er . co m / l ocat e/ gl oenvch a
0959-3780/$ see front matter 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.gloenvcha.2013.07.019
sufciently low lower than actuarial levels. Systematic
misperception or under-estimation of ood risks is thus listed
as the primary reason for non-insurance (Kunreuther, 1996,
2006).
Although the standard assumption has found empirical
support, it also comes with a fair amount of counter-evidence.
For example Baumann and Sims (1978) and Laska (1990) nd no
observable relationship between risk perception and ood
insurance purchase. Hung (2009) even shows that these two
variables are negatively related to each other. Based on a review of
16 relevant empirical studies, Bubeck et al. (2012) conclude that
the explanatory power of risk perception has been overstated.
Findings reported in the present paper also contradict the standard
assumption. A point of departure for understanding the mixed
ndings is that risk perception is related to coping behaviour in
some complex ways, precluding the use of over-simplistic
dichotomous descriptors such as positive and negative. The
present paper suggests that the linkage becomes discernible only
when specic mediating factors are taken into account.
Past research has identied a number of factors contributing to
the coping responses of the individuals, other than risk perception
and personal socio-economic characteristics. These include social
norms (Frank et al., 2011; Grothmann and Patt, 2005; Hu et al.,
2006; Lo et al., 2012; Nelson et al., 2007), which are regarded as a
key driver of the decision to purchase ood insurance (Kunreuther,
2006; Kunreuther et al., 2009). The dominant view holds that social
norms inuence perception of climate risk (Grothmann and Patt,
2005; Renn, 2011; Swim et al., 2010). Social referrals, expectations
and pressures inuence the individuals judgment on what is right
or true, and can therefore determine the ways in which risk
information is processed and anchored, moderate or constrain the
sense of impact, and consequently drive or prevent changes in
behaviour. Yet, recent research ndings indicate that the relation-
ships between these variables are not linear. Frank et al. (2011), for
example, conclude that perception of climate risk is insufcient to
motivate adaptive responses. According to Norgaard (2011) and
Wolf et al. (2010), closer in-group social relations may even lead to
denial or underestimation of risk. Thus, incorporating social factors
into existing conceptual frameworks raise more questions than
offering answers to the mixed observations regarding ood
insurance purchase and climate adaptation generally. Current
knowledge about the dynamics between risk perception, social
norms and risk-related behaviour is far from complete.
Renn (2011) recently suggests that research into these issues,
particularly in relation to climate change risk, could benet from a
conceptual framework that features the reexive process of risk
experience. It is known as the social amplication of risk
framework (Kasperson et al., 2003, 1988; Renn, 2011; Renn
et al., 1992). The Social Amplication of Risk Framework is
proposed as an interpretative framework for understanding
experiences of risk and their behavioural and broader societal
implications. It is based on the assumption that individuals process
risk information either by amplifying signals that appear
frightening or by attenuating those that are less threatening. This
process is driven by or highly sensitive to social parameters, such
as social norms, which are creatively described as a social
amplier of risk. The functioning and transmission power of
such ampliers crucially inuence the formation of risk percep-
tions. They operate through multiple feedback mechanisms and
complicate the ways in which risk perceptions impact upon human
actions. By placing social-cognitive factors at centre, the frame-
work could offer explanations as to why risk-related behaviours
appear insensitive to risk perceptions in some cases.
A source of confusion, however, is that the standard assumption
between perception and behaviour is often taken for granted.
Indirect pathways linking them to each other have received little
attention in the discussions of the Social Amplication of Risk
Framework and other cognate theoretical accounts (e.g. Groth-
mann and Patt, 2005). This paper argues that one of these
alternative pathways involves social norms as a mediator
operating in between. It proves to be helpful for understanding
the observation reported here that perceived risk is not a key
predictor of ood insurance purchase. This paper seeks to clarify
the interrelationships between perceived risk, perceived social
norms, and behavioural engagements with a focus on the
voluntary purchase of residential ood insurance. Findings of a
quantitative analysis ascertain the effects of perceived risk and
social norms on the likelihood of having ood insurance cover. The
research has broader implications for understanding the role of
social inuence in enhancing the capacity for coping with probable
economic impacts of natural disasters on households.
This paper is organised as follow. The next section briey
discusses the role of social norms in behavioural adaptation to
natural catastrophes, with a focus on ood insurance purchase. It is
followed by a further elaboration on the conceptual problems
addressed by this research. The inquiry is supported by a primary
dataset collected in a questionnaire survey conducted in Queens-
land, Australia. Research methods are introduced in the section
that follows. Research ndings are then presented, followed by a
discussion on conceptual implications.
2. Social norms: a source of behavioural distortions?
Norms that evolve from social interactions between individuals
constrain and guide their responses to known hazards. There is
ample evidence supporting the claim that peoples responses to
projected impacts of climate change are strongly inuenced by
what they hear from other members of their social networks
(Grothmann and Patt, 2005; Moser, 2007; Norgaard, 2011; Swim
et al., 2010). These studies, however, do not specically focus on
decisions to insure against the rising risk of ooding due to climate
change. In the literature the role of social norms in inuencing
these decisions remains unclear and contested.
The psychometric tradition of risk analysis offers the dominant
theory of decision making for purchasing natural disaster
insurance (Kunreuther, 1996, 2006; Kunreuther and Slovic,
1978; Slovic et al., 2000). Adherents to this approach suggest that
failures to take out ood insurance stem from systematic bias in
information processing and decision making on the part of the
individual. These cognitive failures include underestimation of
probabilities and myopia, leading to misjudgments on risk
exposure and future benets from risk-mitigating investments
(Kunreuther, 2006). Conformity to social norms and social
interdependencies are another example of such distortive factors
(Kunreuther, 2006; Kunreuther et al., 2009).
An earlier report, dating back to 1970s, has indicated that
discussions with friends, neighbours, and family members could
increase the likelihood of purchasing natural disaster insurance
(Kunreuther, 1978). Based on their earlier research, Kunreuther
and Michel-Kerjan (2009) argue that when homeowners hear that
other people have insured against ood risks, they become
motivated to follow suit even without changing their beliefs
about the risks they face or knowing about the cost of coverage.
Social norms may also result in premature cancellation of
insurance policies after some years of coverage without making
any claim of insured damage (Kunreuther and Michel-Kerjan,
2009, p. 126). Homeowners observe and tend to follow the actions
of their neighbours when deciding how much to spend on
mitigating the ood risks they face.
Concerns have been raised about the normative role of social
norms and interdependencies. Kuran (1995, p. 19) believes that
social norms are social artifacts that mask individual true
A.Y. Lo / Global Environmental Change 23 (2013) 12491257 1250
preferences and result in undesirable social outcomes. In a similar
vein, Kunreuther et al. (2009) argue that social interdependencies
are likely to impede selection of effective risk mitigation options
and exacerbate the cognitive errors the individuals encounter. To
Kunreuther (2006, p. 214), this is a regrettable outcome: a wide
range of problems come under this rubric. The psychometric
approach stresses the pathological aspects of social normative
effects.
Social norms are viewed in a more positive light in the study of
adaptive institutions. Operating social norms and networks
generate social capital and give impetus to collective action
(Ostrom, 2000). Networked relationships among members of
community, built upon norms of trust and reciprocity, enable the
sharing of knowledge, risk and resources, and can support recovery
from natural disasters and the resulting economic shocks through
mutual aids. Social norms and networks are generally deemed to
be conducive to adapting communities to climate change and
reducing their vulnerability (Adger, 2003; Nelson et al., 2007;
Pelling and High, 2005), despite some counter-evidence (Wolf
et al., 2010). Afrmative empirical evidences exist in the literature
of ood risk management (Wong and Zhao, 2001), but very few
pertain to the purchase of ood insurance specically.
There is a shortage of evidence on how social norms might help
communities adapt to climate change by promoting voluntary
adoption of ood insurance. While the virtue of social norms is
portrayed as a source of behavioural distortions under the
psychometric approach, it is considered to be pivotal to enhancing
adaptive capacity under the social network approach. This means
that it has mixed impacts on the capacity for climate adaptation.
According to the Social Amplication of Risk Framework, the merits
of these claims depend on the ability of social networks and the
norms they engender to select the right aspects of risk and impact
information, effectively transmit relevant risk signals to affected
groups or individuals, and induce proper responses. In these
processes the persuasive forces of social norms play a mediating role.
A mediator relates one factor to another one which would
otherwise lack observable linkage. But this does not seem to be a
key premise of those conceptual frameworks that afrm the role of
social norms in climate adaptation, including the Social Ampli-
cation of Risk Framework. This limitation is discussed in the
following section.
3. Relationships between risk perception, social norms, and
behaviour
3.1. Feedback mechanisms
The interaction between social norms and risk perceptions
complicates the formulation of coping responses by the individu-
als. Psychologists suggest that this is a dynamic and continuous
process, in which individuals responses and their societal impacts
feedback and eventually become a determinant of risk perception
and other related parameters (Swim et al., 2010). The Social
Amplication of Risk Framework explicitly recognises these
complexities.
Social amplication of risk is based on the idea that events
pertaining to hazards interact with psychological, social, institu-
tional, and cultural processes in ways that can heighten or
attenuate individual and social perceptions of risk and shape risk
behaviour (Renn et al., 1992, p. 139; see also Kasperson et al.,
1988). Risk signals are subject to subjective transformations as
they run through social and cultural channels and individual
cognitive processes. Such transformations can increase or decrease
the volume of risk information received, and may lead to
reinterpretation of the risk events (Kasperson et al., 2003). Social
amplication thus denotes both intensication and attenuation of
risk signals when they are transmitted through social stations,
such as news media and social networks, and individual stations,
such as the use of intuitive heuristics and attention lters by the
individual (Kasperson et al., 1988; Renn, 2011). This process may
lead to overreactions of target audiences as well as their failures as
respond.
As a core element of the Social Amplication of Risk Framework,
social norms and interactions operate within informal personal
networks, which are one of the two major communication
networks that facilitate the ow of risk information and account
for the societal processing and reconstruction of risks (Kasperson
et al., 1988, p. 185). The metaphor of amplier creatively illustrates
that the magnitude of outcoming risk perceptions depends on the
functioning and the transmission power of various societal and
individual processors, such as social norms. The holistic scope of
the Social Amplication of Risk Framework permits multiple
feedback mechanisms by which incoming risk signals, social
ampliers, and output responses interact in a dynamic fashion (as
schematically depicted in Kasperson et al., 2003, p. 14 and Renn,
2011, p. 157).
The Social Amplication of Risk Framework could shed some
light on the empirically ambiguous role of risk perception in
inuencing behaviour. The multiple feedback mechanisms allow
alternative explanations for the ways in which risk perceptions
induce behavioural adjustments. Although the idea is compelling,
in practice there has been an emphasis on the impacts of social
norms on risk perception, but less on the opposite way. This raises
questions about the explanatory power of the Social Amplication
of Risk Framework as well as other cognate theoretical accounts
with such a focus.
3.2. Mediation by what?
Although the metaphor of social amplier implies mediation by
social norms, messages from the eld are confusing. For example,
Renn et al. (1992, p. 151) nd that social stations, represented by
news media coverage in their study, create impacts on behaviour
indirectly by shaping risk perceptions. In keeping with his earlier
observation, Renn (2011, p. 156) describes the causal relationship
in this way:
Social interactions can heighten or attenuate perceptions of
risk. By shaping perceptions of risk, they also inuence risk
behaviour.
This suggests that risk perceptions mediate between social
interactions and behavioural changes, rather than social interactions
being a mediator itself. Likewise, other empirical reports that adopt
the Social Amplication of Risk Framework tend to focus upon how
societal processes affect risk perceptions (Pidgeon et al., 2003). Little
attention has been paid to the opposite route, although this is clearly
part of the Social Amplication of Risk Framework.
Similarly, other cognate theoretical accounts tend to assign a
mediator role for risk perception. For instance Wolf et al. (2010)
conclude that social networks could impede proper coping
responses by perpetuating misperception of risk. Grothmann
and Patt (2005) also put risk perception at the centre. In their socio-
cognitive model, social discourse, which includes the factor of
social inuences, has no direct conceptual linkage to adaptive
intention, which is a precursor of adaptive behaviour. There is only
an indirect linkage drawn through the mediator of risk perception
(Grothmann and Patt, 2005, p. 205; Patt and Schro ter, 2008, p.
465). Likewise, Lindell and Hwang (2008) portray perceived risk as
a mediating variable linking hazard adjustment and other factors
which would otherwise be weakly related to each other.
A problem with this treatment is that the immediate causal
relationship between risk perception and behavioural response is
A.Y. Lo / Global Environmental Change 23 (2013) 12491257 1251
taken for granted. Certainly there are other factors in between. Yet,
as far as the role of social norms is concerned, it is often portrayed
as a determinant of risk perception rather than also an outcome of
it (as illustrated by the Path 1 in Fig. 1). The indirect route by which
risk perceptions create impacts upon coping behaviour by
inuencing social norms backward is often ignored (Path 2).
There is a lack of consistent and clear methodological emphasis on
the multiple, indirect routes by which heightened perceptions of
risk spawn behavioural responses. Instead, there is stronger focus
on Path 1 than Path 2. The failure to engage in reverse thinking
limits our ability to comprehend systematic departures from the
usual assumption.
People might fail to act even if they receive amplied risk
messages and adjust their perceptions of risk accordingly. There is
some evidence on the weak linkage between risk perception and
related adaptive action. For example Frank et al. (2011) conclude
that perception of climate risk is insufcient to motivate
adaptation. Other empirical reports have indicated that perceived
ood risk is not related to the purchase of ood insurance
(Baumann and Sims, 1978; Laska, 1990), nor actions to mitigate
ood risks generally (Bubeck et al., 2012; Wong and Zhao, 2001).
On a larger and causally related issue, sociologists note that people
may choose to ignore collectively the possible dreadful conse-
quences of climate change and remain silent with little motivation
to act even if they are well informed and aware of the risks ahead
(Norgaard, 2006, 2011). Amplied, or exaggerated, messages about
impending disasters may discourage climate change actions
(Moser, 2007; Moser and Dilling, 2011). Perceiving natural risks
as low may not be a sufcient reason for the failures to act.
This certainly does not mean that risk perceptions have no
behavioural implications. Risk perceptions, in terms of the Social
Amplication of Risk Framework, can act as an amplier itself. For
instance, the belief that future ooding is likely and inescapable
has elevated expectations for mutual assistance among villagers in
shared social networks, giving impetus to the evolution of new
social norms for dealing with oods (Wong and Zhao, 2001). Other
studies have also indicated that social processors of risk, such as
social inuences (Short, 1984), social identity (Frank et al., 2011)
and social trust (Frewer, 2003), play a mediating role between risk
perception and behavioural response.
These social processes or processors alter the ways in which
individuals perceive natural hazards, but risk perceptions can also
feedback by moderating the ways in which they perceive and
collectively (re)construct these social processes or processors, or
the institutions in which they operate. These relationships are,
therefore, reexive and reciprocal (Short, 1984). In social life,
peoples perceptions of social norms interact with perceptions of
risk and drive behaviour accordingly, along an alternative pathway
linking perception and behaviour (Path 2 in Fig. 1). A concomitant
reverse amplication process is possible, in which risk perceptions
shape the ways in which individuals see themselves as part of a
social or cultural group with a specic view on the issue at stake.
Conformity to prevailing social norms is a key determinant of
behavioural change, which may be related to risk perception
indirectly through the mediator of perceived social norms.
Risk perceptions are not merely an object of amplication, but
may also amplify perceptions of other aspects of social life. This
view could offer a better understanding about how adaptive
actions are motivated, even when they appear insensitive to the
perceptions of related climate risks at rst sight. Social norms can
play a mediating role, linking perception and behaviour. To provide
empirical evidence on this claim, primary data from a household
survey were analysed with a focus on the dynamic between these
variables. The empirical study is introduced in the next section.
4. Study design
4.1. Research questions
This research examines the role of perceived social norms in
mediating between risk perception and adaptive actions. All of the
causal relationships portrayed in Fig. 1 were statistically tested.
That is, whether or not perceived risk and perceived social norms
are related to each other, and whether or not these two factors are
related to adaptive behaviour. Perceptions of ood risk and related
social norms, and the purchase of ood insurance cover, are used as
the main measurements for the inquiry. Three working hypotheses
are developed accordingly:
H1. Perceived social norms are related to perceived ood risk
H2. Perceived social norms are related to the purchase of ood
insurance
H3. Perceived ood risk is related to the purchase of ood
insurance
It is hypothesised that the amplifying effects may run through
multiple routes, and that the one mediated by social norms (Path 2
in Fig. 1) is signicant (H1 and H2). The standard assumption that
risk perception is positively associated with behaviour is also
examined (Path 1) (H3). In addition, two auxiliary measurements,
introduced in the following section, are included to support
interpretation of results.
4.2. Measurements
Data for addressing the listed research hypotheses were
collected by a structured questionnaire survey. Survey items
included questions about the purchase of ood insurance. Respon-
dents were asked if they currently had home and/or contents
insurance on the residential property they were living in. Those
who returned a positive response were then probed whether or not
they had ood cover on that insurance. Positive responses to the
second question were coded 1 to indicate the holding of ood
cover, or 0 if otherwise.
An auxiliary measurement was included in the analysis to
address the limits of using ood insurance purchase as an indicator
of behaviour. The failure to insure might be due to lack of
opportunity for example, insurance companies refuse to offer
ood cover for those residential properties at very high ood risks.
Thus, there might not be a choice for households located at a
known ood-prone site, regardless of their desire to get insured.
Methodological isolation from such unintended factors can be
achieved by introducing an attitudinal variable, namely, perceived
importance of ood insurance, which is intuitively closely related to
the purchase decision (Pynn and Ljung, 1999; Zaleskiewicz et al.,
2002). For this purpose, one of the survey questions requested
respondents assess the importance of ood insurance in providing
nancial security to their household.
Path 1
Percepon of
social norms
Risk
percepon
Behaviour (and
atude)
Path 2
Fig. 1. Hypothesised relationships between perception of social norms, risk
perception, and risk related behaviour (and attitude).
A.Y. Lo / Global Environmental Change 23 (2013) 12491257 1252
Perceived risk was gauged by asking respondents to what extent
in which the home or property they currently live in is exposed to
the risk of ooding, based upon a ve-point scale ranging from no
risk to extreme risk. Since causality cannot be determined by
testing statistical correlation between perceived risk and perceived
social norms (H1), an auxiliary measurement is introduced to
support interpretation, i.e. recent experience of property damage
due to ooding. Whether ones home had suffered from ood
damage or not is unlikely to be affected by perceived social norms.
Also, it is logically closely related to how people perceive future
ood risks (Botzen et al., 2009; Grothmann and Reusswig, 2006;
Hung et al., 2007). Therefore, this measurement allows logical
inference and can be used to examine, indirectly, the conjecture
that risk perception inuences perception of social norms.
Respondents were probed to indicate if the 2011 Queensland
oods had created any damage on their current residential
property (Yes or No).
Perceived social norms relating to the decision to purchase ood
insurance were elicited by two items using a ve-point Likert scale,
ranging from strongly disagree to strongly agree. They were
measured in terms of the level in which the respondents believed
that (1) their family or friends want them to purchase ood
insurance and (2) other people like them would purchase ood
insurance. These measures resemble the way in which social
inuences are described in a draft public consultation paper
(Productivity Commission, 2012, p. 62).
4.3. Administration of the survey
This questionnaire survey was conducted in the largest cities of
Queensland, Australia. Australia does not yet have a complete
national policy for regulating the provision of commercial ood
insurance. Flood cover premiums are risk-based and the average
amounts range from AUD77 (Low Risk) to AUD5,496 (Extreme
Risk), or AUD1,018 across all risk bands (Insurance Council of
Australia, 2011, p. 14) (AUD/USD = .993, as of 16 May 2012. Source:
U.S. Federal Reserve). Government subsidies on ood coverage
remain limited, and a standard denition of ood has come into
force only recently. Insurers are not required to include ood cover
in standard home and contents policies. In many cases where ood
cover is offered, however, the policyholder can and does opt-out
(Australian Treasury, 2011).
The State of Queensland was affected by the 201011 oods to
different extents. Catastrophic oods hit the south-eastern part of
Queensland in the early January 2011. Prolonged and extensive
rainfall led to ooding of historic proportions in the State. The
economy was severely damaged as a result. Coal exports were
disrupted, causing contraction in real GDP (Lim et al., 2012). The
oods affected more than 136,000 homes and businesses, and led
to the death or missing of 36 people (Queensland Government,
2011, p. 16; Queensland Government, 2012, p. 32). The resulting
economic losses amounted to AUD$5.8 billion (Queensland
Government, 2011, p. 3).
Survey sites include the Gold Coast Council Region, the Sunshine
Coast Council Region, and the Greater Brisbane Region. According to
Australian Bureau of Statistics (ABS) 2011 Census data, these regions
currently account for 64.3% of the total population of Queensland, or
13.0% of Australias population. Brisbane is the States capital and has
experienced its second highest ood since the beginning of the 20th
century during the 201011 Queensland oods. The Gold Coast,
approximately 80 km south of Brisbane, is ranked as one of the most
ood prone local councils in Australia (Smith, 2002). Recent ofcial
reports conrm that the Gold Coast and the Sunshine Coast, 100 km
north of Brisbane, remain among the Queenslands local government
areas at the greatest risk of inundation (Department of Climate
Change, 2009). According to the Intergovernmental Panel on Climate
Change, there will be more severe ood events in South East
Queensland due to climate change (Hennessy et al., 2007, p. 530).
The main survey was conducted in May 2012, preceded by a
pilot test to allow renements to the survey instrument. An
established market research company was appointed to undertake
the surveys using the Computer Assisted Telephone Interviewing
(CATI) technique. Sample was selected using a random digit dialing
approach for households with landlines, stratied by telephone
exchange prex. It was supplemented with 1015% of residential
mobile phone numbers selected from the electronic white pages so
that mobile numbers could be stratied by region (as these
numbers have a residential address attached to them).
Quotas were used in the selection of household for interview.
Since the survey sought to interview the person in the household
who was the most knowledgeable about their household insur-
ance, the introductory text asked to speak to the person in the
household mainly responsible for payment of the major household
bills. In order to obtain a representative sample of households,
sample quotas were set by the number of people living in each
household per region, based on the latest available census data
(2006). The number of people in household was obtained from
each contacted household who agreed to participate, and used for
initial screening in accordance with the set quotas.
5. Research ndings
5.1. Characteristics of the sample
A total of 501 household representatives completed the
interviews, at the response rate of 20.2%. Fewer households with
only one person (18%) completed the survey than actually resident
in the regions (22.5%, based on 2006 census data). Thirty-eight per
cent of the households interviewed across the three regions
consisted of two members only, slightly higher than the regional
estimate of 35.6%. Families with four members or more were also
over-represented in the survey by a small margin, i.e. 26.8%
comparing to the regional estimate of 25.4%. The sampling method
produced a generally representative sample in terms of household
composition.
Other socio-economic information collected included gender,
education attainment, and income. More than half (55.7%) of the
respondents were female. About 3.2% were aged 30 or below and
23.2% were between 31 and 45. More than 70% of respondents
were 46 or older. Holders of a university degree or higher
accounted for 40.9 per cent of the sample. Nearly one-third of
respondents had an annual household income below AUD50,000.
Less than a half (47.3%) earned between AUD50,000 and
AUD150,000 a year. Few of them (12.2%) had more than
AUD150,000. The rest of the respondents refused to disclose
income information.
5.2. Model variables
Model variables for hypothesis testing are shown in Table 1. Of
those households surveyed who had home and/or contents
insurance (i.e. excluding non-policyholders), 62% claimed to have
ood cover on it (or 56% if non-policyholders are included). In
response to the question about the importance of ood insurance
in providing nancial security for their household, 70.7% of
respondents selected one of the two agreement options (Strongly
agree and Agree), yielding a mean score of 3.90.
Most of the respondents reported living in an area of low ood
risk. Nearly 60% of them believed that they were not exposed to
any risk of ooding, and 32.1% faced low ood risk. Less than 10%
reported exposure to medium, high, or extreme risks. This yielded
A.Y. Lo / Global Environmental Change 23 (2013) 12491257 1253
a mean score of 1.55. In addition, about 9% of the respondents had
their properties damaged by the 2011 catastrophic oods.
The rst item of perceived social norms recorded a mean score
of 2.59. This included about one-fourth (25.8%) of the respondents
who felt that they were subject to expectations from family or
friends to insure against ooding. Almost half of the respondents
(47.6%) agreed that most other people would purchase ood
insurance. The mean score for this item is 3.30.
Correlation coefcients between all of the model variables are
listed in Table 2. Both of the auxiliary measurements are
signicantly related to their logical associates (i.e. perceived
importance related to ood insurance purchase, and ood damage
experience related to perceived risk). Note also that perceived risk
correlated with the likelihood of having ood insurance (hereafter
called ood cover) as well as its perceived importance. However,
the magnitude of statistical signicance declined sharply when
some other factors were controlled for, as shown in the next
section.
5.3. Path analysis
A further analysis was conducted based on structural equation
modeling and using SPSS Amos 21.0. Fig. 2 presents the path
estimates for perceived social norms, perceived risk, ood damage
experience, and ood cover. Although perceived risk correlated
with ood cover (as shown in Table 2), the explanatory power
diminished when it was mounted on a regression model. Both of
the two items representing perceived social norms were signi-
cantly associated with the likelihood of having ood cover as well
as perceived risk.
Similarly, actual ood damage experience created no signicant
impacts on ood cover. However, this variable correlated with one
of the social normative variables, i.e. expectations from family
members or friends. Since damage on property is an objective and
involuntary outcome, a logically sensible interpretation is that the
experience with ood damage elevated the level of perception of
social norms on the part of the affected households, i.e. perception
is likely to be an effect of ood experience rather than a cause
(hence the direction of arrows). These signicant estimates came
with positive signs, suggesting that they increased with each other.
The path analysis shows that ood cover is a function of perceived
social norms, but not perceived risk and ood experience which are
in turn associated with the normative variables.
Table 1
Descriptive statistics for model variables.
Item Description Range Agreement (%) Mean Standard deviation
Have ood cover Reported to have ood cover on
current insurance policies (yes or
otherwise)
01 .62 .49
Flood insurance is important Flood insurance is important as it
provides nancial security for my
household (ranging from Strongly
disagree to Strongly agree)
15 70.7 3.90 1.37
Perceived risk Perceived ood risk of home/property
currently living (ranging from No
Risk to Extreme Risk)
15 1.55 .78
Flood damage experience The major ooding event in
Queensland in 2011 caused damage
to the home/property currently living
(Yes or otherwise)
01 .09 .28
Family/friends want me to insure My family or friends think I should
insure my house against ooding
(ranging from Strongly disagree to
Strongly agree)
15 25.8 2.59 1.41
Other people would buy too Most people like me will purchase
ood insurance (ranging from
Strongly disagree to Strongly agree)
15 47.6 3.30 1.33
Perceived ood risk to
own property
Perceived social norms
Have ood
cover on
current
insurance
policies
Perceived risk and
hazard experience
Behaviour
.11*
.30***
.06
(R
2
= 13.9)
The 2011 oods caused
damage to own property
-.06
Family / friends
want me to
insure
Other people
would buy too
.30**
.00
.35***
.33***
Insignicant path Signicant path
Notes: All coecients are standardised. * p < .05, ** p <.01, *** p < .001
.13**
.09*
Fig. 2. Path analysis of the likelihood of having ood insurance cover.
Table 2
Correlation coefcients for model variables.
Have ood cover Flood insurance
important
Perceived risk Flood damage
experience
Family/friends want
me to insure
Flood insurance is important .268
**
Perceived risk .163
**
.139
**
Flood damage experience .031 .079 .327
**
Family/friends want me to insure .352
**
.282
**
.302
**
.130
**
Other people would buy too .218
**
.422
**
.086 .002 .351
**
**
Signicant at the .01 level (2-tailed).
A.Y. Lo / Global Environmental Change 23 (2013) 12491257 1254
The same pattern of relationships replicated for the perceived
importance of ood insurance, as illustrated in Fig. 3. Perceived risk
remained statistically insignicant, whereas both of the social
norm variables demonstrated strong impacts on the dependent
variable. Again, this means that perceived risk lost explanatory
power when these social normative factors were controlled for.
Perceived importance was also not sensitive to ood damage
experience. Substituting ood cover for perceived importance did
not create observable qualitative variations from the regression
models presented in Fig. 2. This suggests that the behaviour of and
attitude toward insuring against ood risks responded to the
independent variables consistently. Perceived social norms proved
to be a powerful explanatory factor.
6. Discussions
The path estimates reported consistently support hypotheses
H1 and H2 listed earlier in the paper, but not H3. The auxiliary
measurements helped triangulate the ndings. Two important
observations warrant further discussions. First, risk perception
evidenced only a modest degree of association with the adoption of
ood insurance cover. Second, perceived social norms mediated
between perceived risk and the likelihood of having ood cover. In
this study, therefore, the Path 1 depicted in Fig. 1 is not active,
whereas Path 2 proves to be the way through. A schematic
summary of survey results is provided in Fig. 4.
As an indicator of coping behaviour, the purchase of ood
insurance is evidently a function of the interaction between risk
perception and social norms. Controlling for social norms,
however, risk perception lost explanatory power. Bubeck et al.
(2012) suggest that the weak linkage between risk and insurance
purchase is due to a timing effect, where individuals acquire a
sense of personal security after obtaining ood cover for their
property. Consequently, the policyholders become less concerned
about the risk of ooding to which they are exposed.
Another possible explanation, supported by the present
research, is that perceived risk creates impacts through alternative
pathways. Intuitively as well as statistically, risk perception is
closely related to experience of ood damage. The latter is found to
be a correlate of perceived expectations from family or friends and,
logically, is likely to be a cause rather than an effect. This allows a
conjecture about the casual relationship between the perceptions
of risk and social norms, particularly those operating within
intimate social circles. That is, perception of social norms may be
determined in part by perception of risk (this does not preclude the
opposite way). The individuals feel social pressures to take out
ood insurance because they worry about the ood risks they face.
Material damage created by oods could strengthen this feeling.
Perception of social norms predicted behaviour. This completes
the Path 2 by linking risk perception and insurance purchase. Here,
perceived social norms play a mediating role, correlating with the
other two variables that would otherwise lose connection. This
mediating effect also applies to damage experience. Moreover, the
Path 2 remains intact when the behavioural variable is substituted
by a proximate attitudinal variable. Therefore a key nding of this
research is that, paraphrasing Renns (2011, p. 156) argument
quoted earlier, risk perception can inuence perceptions of social
norms, and by shaping these perceptions, they also inuence risk
behaviour. This is an indirect pathway by which perceived risk
comes into play.
These results have broader conceptual implications that are
intelligible to comprehensive accounts, notably the Social Ampli-
cation of Risk Framework. Collectively, individual perceptions of
risks may ultimately contribute to the reorganisation of social
stations (Kasperson et al., 1988; Renn, 2011) or the reconstruction
of the social discourse (Grothmann and Patt, 2005). This involves a
dynamic societal feedback process in which individual perceptions
manifest as both a cause and effect, shaping and being shaped by
the socio-cultural context. Risk perception, in terms of the Social
Amplication of Risk Framework, may be an amplier itself,
contributing to changes in the perception of the society, culture,
and institutions. These changes impact upon coping behaviour and
eventually create the ripple effects spreading throughout the
larger society (Kasperson et al., 1988; Renn, 2011).
This suggests that risk perception may not always be a directly
observable determinant of behaviour. Contrary to the dominant
view, most notably advanced by Kunreuther (1996, 2006),
perceived risk is not found in the present study to be a major
predictor of ood insurance purchase. Damage experience is also
not predictive. The counter-evidence, nonetheless, does not imply
conceptual irrelevance. It is the systematic relationships between
the tested variables requiring reconceptualisation. Despite the
relative strengths of perceived risk and social norms vary by case, it
is conceivable that they relate to each other in a dynamic fashion.
Given that perceived social norms are a stronger predictor, the
effect of risk perception on insurance purchase may then be
envisaged as an indirect one. The evolution and reproduction of
social norms powered by elevated perceived risks is a source of
behavioural impacts that is missing from the dominant view.
It is worth noting that decisions bound by social norms do not
necessarily take the form of coordination games (Kunreuther
et al., 2009, p. 13). The most signicant mediating variable
identied in this study was framed in terms of kinship or
friendship, i.e. expectations of family members or friends. It
connotes a sense of care by people familiar and presumably
Perceived ood risk to
own property
Perceived social norms
Flood
insurance is
important
Perceived risk and
hazard experience
Atude
.37***
.13**
.05
(R
2
= 20.5)
The 2011 oods caused
damage to own property
.04
Family / friends
want me to
insure
Other people
would buy too
.30***
.00
.35***
.33***
.09*
.13**
Insignicant path Signicant path
Notes: All coecients are standardised. * p < .05, ** p <.01, *** p < .001
Fig. 3. Path analysis of the attitude toward ood insurance.
Insignicant path
Percepon of
ood risk
Purchase of
ood insurance
Experience of
flood damage
Perceived
importance
Percepon of
social norms
Signicant path
Fig. 4. Observed relationships between perception of social norms, risk perception,
and risk related behaviour (and attitude).
A.Y. Lo / Global Environmental Change 23 (2013) 12491257 1255
important to the respondents, which is not perfectly amenable to
the standard game theoretic treatment suggested by Kunreuther
et al. (2009, p. 14). It might be tenable, but clearly insufcient, to
understand the role of social norms in such terms.
Social norms may act as a subjective lter determining the
ways in which perceived risk is responded to. As observed by
Frank et al. (2011), farmers perceiving climate risks to be high
were not motivated to take adaptive actions as these are deemed
to be futile efforts, unless the risk and adaptation information
comes from an afliated social in-group or a trusted out-group.
Thus, the key is not the magnitude of perceived risk, but the
mediating role of social identity and related social norms (Frank
et al., 2011). Social identity is regarded as a critical factor that
could activate the motivational energy of perceived risk by
enhancing a sense of self-efcacy, which is found in another study
to be a motive for the purchase of ood insurance (Baumann and
Sims, 1978). Baumann and Sims (1978) observation that risk
perception failed to explain the purchase decision could have
been addressed by exploring its causal relationship with the sense
of self-efcacy. More generally, the indirect behavioural impacts
of risk perception could be better understood by ascertaining its
inuences on the collective and personal attributes of social life.
Such attributes not only affect how risk is perceived, but might
also be a manifestation of perceived risk, both accounting for the
propensity to act.
7. Conclusions
In this study, perceived ood risk was not found to be a
predictor of ood insurance purchase. Perceived social norms not
only demonstrated strong impacts on the insurance decision, but
also associated with perceived risk. This factor therefore played a
mediating role by correlating with risk perception and behaviour
which lost immediate connection in a regression model. This
indicates a possible indirect pathway by which risk perception
impacts upon coping behaviour.
The ndings could offer more analytic options for investigat-
ing the interrelationships among climate adaptation, risk
perception, and social networks and interactions. Higher
motivation to adapt is increasingly understood as largely
dependent upon the capacity of social networks and interactions
to shape risk perception in desirable ways (Frank et al., 2011;
Wolf et al., 2010). The socially constructed perceptions of risk
can, in turn, inuence the ways in which the individuals
subjectively situate themselves in their social circles or the
larger society in relation to the risk issues concerned. Adaptive
actions are then not, or not only, a functionof risk perception, but
an outcome of its impacts upon the perception and consequently
operation of social networks and institutions.
Although such perspectives are familiar to advocates of the
Social Amplication of Risk Framework and other cognate
theories, institutional recognition remains limited (e.g. Produc-
tivity Commission, 2012; The World Bank, 2010). They also
warrant more attention by the dominant school of catastrophe
economics (Kunreuther, 2006; Kunreuther and Michel-Kerjan,
2009), which addresses the economic aspects of climate
adaptation, particularly the purchase of natural disaster insur-
ance. Further research could examine a wider range of related
economic decisions, such as voluntary relocation of homes in
anticipation of catastrophic oods or sea level rises. Perceived
social norms could be more broadly dened in terms of the larger
society, ethnic or religious culture, and other informal institu-
tions. A more sophisticated scale for measuring risk perception
could also help substantiate the arguments developed in this
paper.
Acknowledgements
This research was funded by the Grifth Climate Change
Response Program (GCCRP). The GCCRP also supported a presen-
tation of this paper at the 2012 conference of the Australia New
Zealand Society for Ecological Economics held on the Gold Coast.
Comments from conference participants on this paper are
appreciated.
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