Regression Analysis of Financial Loss Due to Hurricane Harvey

The objectives of this research are to identify socioeconomic variables which are associated with financial loss per capita caused by hurricanes and to examine the strength of the relationships between the significant variables and the financial loss per capita. Since hurricane occurrences are unavoidable, researchers’ interest has focused on reducing damages generated by hurricanes. To mitigate potential losses, it is important to understand which socioeconomic factors are significantly associated with the disaster loss. This research proposes a method to identify which socioeconomic variables impact the financial loss per capita caused by hurricanes and how the effects of those variables vary. An ordinary least squares regression is performed to identify variables that significantly impact financial losses. This research uses insurance claim payouts generated by Hurricane Harvey in 62 Texas counties to measure the direct financial loss per capita. Analyses results suggest that communities with the following features are relatively more vulnerable to hurricanes: located where severe storms pass through, higher rainfall amounts, lower rates of homeownership, higher percentage of mobile homes, lower employment rates, and higher female population. Findings from this research will offers insights on identifying areas susceptible to hurricane-related damages and mitigate potential disaster losses.