Working Paper: NBER ID: w21400
Authors: Chie Hanaoka; Hitoshi Shigeoka; Yasutora Watanabe
Abstract: We investigate whether individuals’ risk preferences change after experiencing a natural disaster, specifically, the 2011 Great East Japan Earthquake. Exploiting the panels of nationally representative surveys on risk preferences, we find that men who experienced greater intensity of the Earthquake became more risk tolerant after the Earthquake. Furthermore, these men gamble more, which is consistent with the direction of changes in risk preferences. We find no such pattern for women. Finally, the effects on men’s risk preferences are persistent even five years after the Earthquake at almost the same magnitude as those shortly after the Earthquake.
Keywords: risk preferences; natural disasters; panel data; Japan
JEL Codes: C23; D81; J16; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Earthquake intensity (Q54) | Risk preferences (D81) |
| Earthquake intensity (Q54) | Gambling behavior (L83) |
| Men's experience of earthquake (H84) | Increased risk tolerance (G40) |
| Earthquake intensity (Q54) | Gender differences in risk preferences (D81) |
| Earthquake intensity (Q54) | Risk aversion in women (D91) |
| Panel data approach (C23) | Bias reduction in estimates (C51) |