RT Journal Article
SR Electronic
T1 Risk-Taking Behavior in the Wake of Natural Disasters
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 484
OP 515
DO 10.3368/jhr.50.2.484
VO 50
IS 2
A1 Cameron, Lisa
A1 Shah, Manisha
YR 2015
UL http://jhr.uwpress.org/content/50/2/484.abstract
AB 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.