The Impact of Natural and Manmade Disasters on Household Welfare

In this paper, we provide selective evidence on the impact of natural and manmade disasters on household welfare. First, we consider ex ante risk management and ex post risk-coping behaviors separately, showing evidence from the Asian economic crisis, earthquakes, and tsunami disasters. Second, we differentiate idiosyncratic risks which can be diversified away through mutual insurance from non-diversifiable aggregate risks which characterize a disaster. We also discuss the difficulties of designing index-type insurance against natural disasters, which are often rare, unforeseen events. Then, we investigate the role of self-insurance against large-scale disasters under which formal or informal mutual insurance mechanisms are largely ineffective. Credit accessibility is identified as one of the key factors facilitating risk-coping strategies. We also discuss public policy issues of emergency aid after disasters.


Issue Date:
2006
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/25750
Total Pages:
42
Series Statement:
Plenary Paper




 Record created 2017-04-01, last modified 2017-08-24

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