Download This PaperThe Stability and Evolution of Risk Attitudes and Time Preferences After a Disaster
35 Pages Posted: 18 May 2020 Last revised: 8 Dec 2021
Date Written: December 7, 2021
Abstract
We examine the evolution of risk attitudes and time preferences after the 2006 Yogyakarta earthquake, one of the largest recent earthquakes in Indonesia. Employing the earthquake as a natural experiment and using information on the pre-earthquake location of individuals, we compare the evolution of the behavioral parameters of respondents in earthquake affected communities with those in neighboring communities which were not affected. We find strong gender-specific effects one year after the earthquakes which completely disappear within 8 years in our panel. The analysis points to the importance of recovery efforts in mitigating the duration of the earthquake’s effects. Our results suggest that insofar as behavioral parameters evolve over time, the responses of disaster-affected households to policies may similarly evolve. Consequently, the effectiveness of post-disaster interventions may need to be evaluated periodically.
Keywords: Shocks, Behavioral Parameters, Earthquake
JEL Classification: I15, J13, J16, O53
Suggested Citation: Suggested Citation