IDEAS home Printed from https://ideas.repec.org/a/wly/jpamgt/v26y2007i4p811-830.html
   My bibliography  Save this article

Redlining or risk? A spatial analysis of auto insurance rates in Los Angeles

Author

Listed:
  • Paul M. Ong

    (School of Public Affairs, UCLA)

  • Michael A. Stoll

    (School of Public Affairs, UCLA)

Abstract

Auto insurance rates can vary dramatically, with much higher premiums in poor and minority areas than elsewhere, even after accounting for individual characteristics, driving history, and coverage. This paper uses a unique data set to examine the relative influence of place-based socioeconomic characteristics (or redlining) and place-based risk factors on the place-based component of automobile insurance premiums. We use a novel approach of combining tract-level census data and car insurance rate quotes from multiple companies for sub-areas within the city of Los Angeles. The quotes are for a hypothetical individual with identical demographic and auto characteristics, driving records, and insurance coverage. This method allows the individual demographic and driving record to be fixed. Multivariate models are then used to estimate the independent contributions of these risk and redlining factors to the place-based component of the car insurance premium. We find that both risk and redlining factors are associated with variations in insurance costs in the place-based component, with black and poor neighborhoods being adversely affected, although risk factors are stronger predictors. However, even after risk factors are taken into account in the model specification, SES factors remain statistically significant. Moreover, simulations show that redlining factors explain more of the gap in auto insurance premiums between black (and Latino) and white neighborhoods and between poor and nonpoor neighborhoods. The findings do not appear sensitive to the individual characteristics of the hypothetical driver. © 2007 by the Association for Public Policy Analysis and Management

Suggested Citation

  • Paul M. Ong & Michael A. Stoll, 2007. "Redlining or risk? A spatial analysis of auto insurance rates in Los Angeles," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(4), pages 811-830.
    • Handle: RePEc:wly:jpamgt:v:26:y:2007:i:4:p:811-830
    DOI: 10.1002/pam.20287
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/pam.20287
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/pam.20287?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nothaft, Frank E. & Perry, Vanessa G., 2002. "Do mortgage rates vary by neighborhood? Implications for loan pricing and redlining," Journal of Housing Economics, Elsevier, vol. 11(3), pages 244-265, September.
    2. Raphael, Steven & Rice, Lorien, 2002. "Car ownership, employment, and earnings," Journal of Urban Economics, Elsevier, vol. 52(1), pages 109-130, July.
    3. Evelyn Blumenberg & Paul Ong, 1998. "Job accessibility and welfare usage: Evidence from Los Angeles," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 17(4), pages 639-657.
    4. Paul M. Ong, 2002. "Car ownership and welfare-to-work," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(2), pages 239-252.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew Schouten, 2022. "Residential relocations and changes in vehicle ownership," Transportation, Springer, vol. 49(1), pages 89-113, February.
    2. Klein, Nicholas J. & Basu, Rounaq & Smart, Michael J., 2022. "In the driver’s seat: Pathways to automobile ownership for lower-income households in the United States," SocArXiv 7ex6z, Center for Open Science.
    3. Yelowitz, Aaron & Scott, Frank & Beck, Jason, 2011. "The market for real estate brokerage services in low- and high-income neighborhoods: A 6 city study," MPRA Paper 35608, University Library of Munich, Germany.
    4. Mauricio Cáceres & Kenneth P. Jameson, 2015. "The effects on insurance costs of restricting undocumented immigrants' access to driver licenses," Southern Economic Journal, John Wiley & Sons, vol. 81(4), pages 907-927, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gurley, Tami & Bruce, Donald, 2005. "The effects of car access on employment outcomes for welfare recipients," Journal of Urban Economics, Elsevier, vol. 58(2), pages 250-272, September.
    2. Baum, Charles L., 2009. "The effects of vehicle ownership on employment," Journal of Urban Economics, Elsevier, vol. 66(3), pages 151-163, November.
    3. Ong, Paul M. & Miller, Douglas, 2003. "Spatial and Transportation Mismatch in Los Angeles," University of California Transportation Center, Working Papers qt2664v2n7, University of California Transportation Center.
    4. Ong, Paul & Miller, Douglas, 2003. "Spatial and Transportation Mismatch in Los Angeles," University of California Transportation Center, Working Papers qt1m84h1b7, University of California Transportation Center.
    5. Lingqian Hu, 2017. "Job accessibility and employment outcomes: which income groups benefit the most?," Transportation, Springer, vol. 44(6), pages 1421-1443, November.
    6. Neil Bania & Laura Leete & Claudia Coulton, 2008. "Job Access, Employment and Earnings: Outcomes for Welfare Leavers in a US Urban Labour Market," Urban Studies, Urban Studies Journal Limited, vol. 45(11), pages 2179-2202, October.
    7. Michael A. Stoll, 2005. "Geographical Skills Mismatch, Job Search and Race," Urban Studies, Urban Studies Journal Limited, vol. 42(4), pages 695-717, April.
    8. Julie Le Gallo & Yannick L'Horty & Pascale Petit, 2014. "Does subsidising young people to learn to drive promote social inclusion? Evidence from a large controlled experiment in France," TEPP Working Paper 2014-15, TEPP.
    9. Denis Anne & Julie Le Gallo & Yannick L’Horty, 2020. "Faciliter la mobilité quotidienne des jeunes éloignés de l’emploi : une évaluation expérimentale," Revue d'économie politique, Dalloz, vol. 130(4), pages 519-544.
    10. Loïc Du Parquet & Emmanuel Duguet & Yannick L’Horty & Pascale Petit & Florent Sari, 2010. "Être mobile pour trouver un emploi ? Les enseignements d’une expérimentation en région parisienne," Documents de recherche 10-08, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    11. Gautier, Pieter A. & Zenou, Yves, 2010. "Car ownership and the labor market of ethnic minorities," Journal of Urban Economics, Elsevier, vol. 67(3), pages 392-403, May.
    12. Farber, Steven & Páez, Antonio, 2009. "My car, my friends, and me: a preliminary analysis of automobility and social activity participation," Journal of Transport Geography, Elsevier, vol. 17(3), pages 216-225.
    13. Karadja, Mounir & Sundberg, Anton, 2023. "The labor market impact of a taxi driver’s license," Working Paper Series 2023:6, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    14. Baorong Guo, 2011. "Household Assets and Food Security: Evidence from the Survey of Program Dynamics," Journal of Family and Economic Issues, Springer, vol. 32(1), pages 98-110, March.
    15. Lorien Rice & Cynthia Bansak, 2014. "The Effect Of Welfare Asset Rules On Auto Ownership, Employment, And Welfare Participation: A Longitudinal Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 306-333, April.
    16. Emmanuel Duguet & Loïc du Parquet & Yannick L'Horty & Pacale Petit, 2019. "Counterproductive Hiring Discrimination Against Women: Evidence From a French Correspondence Test," TEPP Working Paper 2019-06, TEPP.
    17. Miwa Matsuo & Hiroyuki Iseki, 2020. "Giving up Job Search Because I Don't Have a Car: Labor Market Participation and Employment Status Among Single Mothers With and Without Cars," Discussion Paper Series DP2020-07, Research Institute for Economics & Business Administration, Kobe University.
    18. Thakuriah (Vonu), Piyushimita & Persky, Joseph & Soot, Siim & Sriraj, P.S., 2013. "Costs and benefits of employment transportation for low-wage workers: An assessment of job access public transportation services," Evaluation and Program Planning, Elsevier, vol. 37(C), pages 31-42.
    19. Naomi F. Sugie & Michael C. Lens, 2017. "Daytime Locations in Spatial Mismatch: Job Accessibility and Employment at Reentry From Prison," Demography, Springer;Population Association of America (PAA), vol. 54(2), pages 775-800, April.
    20. Åslund, Olof & Blind, Ina & Dahlberg, Matz, 2017. "All aboard? Commuter train access and labor market outcomes," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 90-107.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:jpamgt:v:26:y:2007:i:4:p:811-830. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/journal/34787/home .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.