||Disasters Aggravate Present Bias Causing Depression:
Evidence from the Great East Japan Earthquake
||Yasuyuki Sawada, Keiko Iwasaki and Toyo Ashida
||Disasters affect livelihoods and preferences. We investigate the relationship between damage caused by a disaster and individual hyperbolic discounting, adopting sui generis data from two communities hit by the Great East Japan Earthquake of 2011: Iwanuma and Futaba, where exposure to a disaster aggravates an individual’s present bias captured in elementary or junior high school. This causal relationship is a key mechanism behind the disaster and depression nexus. Our results suggest the need to provide commitment devices to mitigate harmful outcomes induced by aggravated hyperbolic discounting resulting from disaster exposure, thus shedding new light on disaster rehabilitation policies.
|| disaster; preference; present bias; hyperbolic discounting
||Paper in English (35 pages)