Risk-Taking Behavior in the Wake of Natural Disasters

By Lisa A. Cameron, M. Shah. The Journal of human resources, 2015

624 citations recorded by the source corpus.

We investigate whether experiencing a natural disaster affects risk-taking behavior. We conduct standard risk games (using real money) with randomly selected individuals in rural Indonesia. We find that individuals who recently suffered a flood or earthquake exhibit more risk-aversion. Experiencing a natural disaster causes people to perceive that they now face a greater risk of a future disaster. We conclude that this change in perception of background risk causes people to take fewer risks. We provide evidence that experimental risk behavior is correlated with real-life risk behavior, highlighting the importance of our results.

Subfields: General Decision Sciences, Safety Research, Soil Science

View Paper: https://www.semanticscholar.org/paper/de815d65c7c317b7c091edd67f5c378e4427c4b0

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Citations in the corpus

Housing markets in a pandemic: Evidence from historical outbreaks (2020, background): “Existing literature has shown that exposure to major natural disasters (Cameron and Shah, 2015; Goetzmann et al., 2016) or violence (Callen et al.”
Violence, psychological trauma, and risk attitudes: Evidence from victims of violence in Colombia (2018, positive): “…natural disasters, and stress on risk attitudes, impatience, and prosocial behavior (Cesarini, Dawes, Johannesson, Lichtenstein, & Wallace, 2009; Cameron & Shah, 2015; Castillo & Carter, 2011; Cassar, Healy, & Von Kessler, 2011; Eckel, El-Gamal, & Wilson, 2009; Kandasamy et al. 2014; Malmendier…”
Forced Migration and Human Capital: Evidence from Post-WWII Population Transfers (2018, background): “On natural disasters, see Cameron and Shah (2015), Cassar, Healy, and von Kessler (2017), and Hanaoka, Shigeoka, and Watanabe (2018).”
The Economic Lives of Young Women in the Time of Ebola : Lessons from an Empowerment Program (2019, background): “As Figure 4B 39Risk preferences can be impacted by aggregate shocks [Malmendier and Nagel 2011, Callen et al. 2014, Cameron and Shah 2015].”
The Impact of Violence on Individual Risk Preferences: Evidence from a Natural Experiment (2015, background): “For example, Malmendier and Nagel (2011) and Fisman, Jakiela, and Kariv (2015) show that exposure to economic downturns makes people more risk averse and more efficiency-focused, respectively; while Eckel, El-Gamal, and Wilson (2009), Cameron and Shah (2013), and Hanaoka, Shigeoka, and Watanabe (201”
Let's Talk About the Weather: The Impact of Climate Change on Central Banks (2016, background): “Some studies suggest that exposure to natural disasters leads to an increase in observed risk aversion (see Cassar, Healy and von Kessler (2011); Cameron and Shah (2013)). Other studies, however, find a decrease in risk aversion and an increase in risky behaviours such as gambling and drinking (see ”
Do Risk Preferences Change? Evidence from the Great East Japan Earthquake (2018, positive): “…disasters, some find increased risk aversion (van den Berg, Fort, and Burger 2009; Cassar, Healy, and von Kessler 2011; Reynaud and Aubert 2014; Cameron and Shah 2015), while others find decreased risk aversion (Eckel, El-Gamal, and Wilson 2009; Bchir and Willinger 2013; Willinger, Bchir, and…”
Variation in risk seeking behaviour following large losses: A natural experiment (2014, background): “In their study of risk attitudes in areas affected by floods and earthquake in Indonesia, Cameron and Shah (2011) found that concerned populations have 9Home owners’ losses are not limited to property losses.”