Do Risk Preferences Change? Evidence from the Great East Japan Earthquake
- American Economic Journal: Applied Economics (Forthcoming)
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 a year after the Earthquake.
Interestingly, 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. Furthermore, these men gamble
more, which is consistent with the direction of changes in risk preferences.
We find no such pattern for women.
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