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Do Risk Preferences Change? Evidence from Panel Data before and after the Great East Japan Earthquake

Chie Hanaoka, Hitoshi Shigeoka, Yasutora Watanabe

NBER Working Paper No. 21400
Issued in July 2015, Revised in February 2017
NBER Program(s):The Program on Aging, The Environment and Energy Program, The Health Economics Program

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 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. Finally, 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.

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Document Object Identifier (DOI): 10.3386/w21400

Published: Hanaoka, Chie, Hitoshi Shigeoka, and Yasutora Watanabe. 2018. "Do Risk Preferences Change? Evidence from the Great East Japan Earthquake." American Economic Journal: Applied Economics, 10 (2): 298-330. DOI: 10.1257/app.20170048

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