Living Like There’s No Tomorrow: Saving and Spending Following the Sichuan Earthquake

36 Pages Posted: 23 Mar 2016

See all articles by Mateusz J. Filipski

Mateusz J. Filipski

University of Georgia; IFPRI

Ling Jin

HuaZhong Agricultural University

Xiaobo Zhang

International Food Policy Research Institute (IFPRI)

Kevin Chen

International Food Policy Research Institute (IFPRI)

Date Written: September 18, 2015

Abstract

In addition to human casualties and physical damage to infrastructure, natural disasters affect survivors emotionally and psychologically. Research on such impacts has almost exclusively been confined to the medical field, and focused on severe conditions such as post-traumatic stress disorder. The fact that emotional shocks and increased risk awareness may trigger changes in the preferences and behavior of economic agents has until now largely been ignored, including by economists. Based on panel datasets from China’s Sichuan province, which was struck by an earthquake in 2008, and using distance from epicenter as a proxy for earthquake severity, we empirically show that the saving and consumption behavior of households closer to the epicenter changed after the earthquake. They saved less, spent more lavishly on alcohol and cigarettes, and also played majiang (a Chinese game) more often. The magnitude of the estimated impact on saving behavior, a drop of 6 percentage points for each degree of earthquake intensity, is economically significant. It appears that the earthquake has induced a shift in people’s preferences characterized by a carpe diem attitude toward spending and greater preference for the present.

Keywords: China, East Asia, Asia, earthquakes, natural disasters, spending sociology, psychology, risk, seism, carpe diem, discount rate, environmental shocks, resilience, post-traumatic stress disorder

Suggested Citation

Filipski, Mateusz J. and Jin, Ling and Zhang, Xiaobo and Chen, Kevin, Living Like There’s No Tomorrow: Saving and Spending Following the Sichuan Earthquake (September 18, 2015). IFPRI Discussion Paper 1461, Available at SSRN: https://ssrn.com/abstract=2685305

Mateusz J. Filipski (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

IFPRI ( email )

2033 K Street NW
Washington, DC 20006

Ling Jin

HuaZhong Agricultural University ( email )

United States

Xiaobo Zhang

International Food Policy Research Institute (IFPRI) ( email )

2033 K Street, NW
Washington, DC 20006
United States
202-862-5677 (Phone)
202-467-4439 (Fax)

Kevin Chen

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

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