Change in Time Preferences: Evidence from the Great East Japan Earthquake

41 Pages Posted: 25 May 2018

See all articles by Mika Akesaka

Mika Akesaka

Institute of Social and Economic Research, Osaka University

Date Written: April 24, 2018

Abstract

This study examines whether individuals’ time preferences are affected by the damage resulting from the tsunami in the Great East Japan Earthquake of 2011, using panel surveys before and after the earthquake. When the change in time preferences is measured using the (β, δ) model, I find that the present bias tendency is increased (shrinking β), although the change in the time discount rate (δ) is not statistically significant for those affected by the tsunami. This study also investigates changes in time preferences using other behavioral indicators. The results show that those affected by the tsunami are more prone to impulse shopping, procrastination, unplanned overconsumption, and increased body mass indices (BMI). Moreover, I find gender heterogeneous changes in time preferences. Changes in time preferences appeared in males immediately after the earthquake in 2012 and 2013, and have been subsiding thereafter. On the other hand, these changes appeared in females in 2016 and 2017, i.e., after a lag since the earthquake.

Keywords: Natural disasters, Preference stability, Time preference, Present bias

JEL Classification: C23, D91, Q54

Suggested Citation

Akesaka, Mika, Change in Time Preferences: Evidence from the Great East Japan Earthquake (April 24, 2018). ISER Discussion Paper No. 1028, Available at SSRN: https://ssrn.com/abstract=3168255 or http://dx.doi.org/10.2139/ssrn.3168255

Mika Akesaka (Contact Author)

Institute of Social and Economic Research, Osaka University ( email )

6-1 Mihogaoka
Ibaraki city, Ibaraki, Osaka 5670047
Japan

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