Do Risk Preferences Change? Evidence from the Great East Japan Earthquake
68 Pages Posted: 17 Apr 2014 Last revised: 2 Feb 2017
Date Written: January 30, 2017
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 preference, Gender difference, Great East Japan Earthquake, Risk-taking behavior, Persistence, Panel data
JEL Classification: D81, Q54, C23, J16
Suggested Citation: Suggested Citation