Direct Shock Experience vs. Tangential Shock Exposure - Indirect Effects of Flood Shocks on Well-Being and Preferences

Jul 19, 2026

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With extreme weather events increasing, the study examines how witnessing adverse conditions reshapes individuals’ perceptions and, in turn, subjective well-being. Using satellite-based flooding measures linked to an extensive rural Southeast Asia household panel survey, it compares direct shock experience with tangential shock exposure. Results show that proximity to a potentially adverse flood shock, without any reported direct experience, can still reduce subjective well-being. The effect persists and shapes expected future well-being dynamics, with potential politico-economic implications through changing preferences for redistribution policies.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages25

Reading Time1 h 3 min

AccessFree to download

Introduction

Research motivation and gap

Direct vs. tangential shock exposure

Expected mechanisms and implications

Pub lic Disclosure Authorized Pub lic Disclosure Authorized The World Bank Economic Review, 36(4), 2022, 909–933 [https://doi.org10.1093/wber/lhac012](https://doi.org10.1093/wber/lhac012) Article Direct Shock Experience vs. Tangential Shock Exposure: Indirect Effects of Flood Shocks on Well-Being and Preferences Wiebke Stein and Reinhard A. Weisser Abstract With extreme weather events on the rise, the question of how witnessing adverse weather events may affect individuals’ perception, and consequently their subjective well-being, gains in relevance. To identify events that have been witnessed, i.e., tangential exposure to a weather shock, satellite-based data on flooding is linked to an extensive household panel survey from rural Southeast Asia. Contrasting direct shock experience with tangential shock exposure, we find that mere proximity to a potentially adverse shock, without reporting any actual direct shock experience, could be sufficient to reduce subjective well-being. This effect is not only restricted to the present but can also impinge on expected future well-being dynamics. Eventually, such a persistent effect from witnessing a weather shock may have further politico-economic repercussions, for instance, by altering support for redistribution policies. JEL classification: I31, Q51, R23 Keywords: environmental shocks, perception, subjective well-being, GIS data, MODIS flood mapping, Thailand Vietnam Socio Economic Panel 1. Introduction Extreme weather events, such as floods and heavy rain, may not only affect individuals’ economic wellbeing but can have repercussions on their subjective well-being as well.1 Eventually, this implies that Wiebke Stein is a postdoctoral researcher at the University of Hannover, Germany; her email address is stein@wipol.uni[hannover.de. Reinhard A. Weisser](hannover.de. Reinhard A. Weisser) (corresponding author) is a Lecturer at Nottingham Trent University, Nottingham, United Kingdom; his email address is [reinhard.weisser@ntu.ac.uk. The authors](reinhard.weisser@ntu.ac.uk. The authors) thank two anonymous referees for providing valuable feedback. We also thank Lukas Menkhoff, Stephan Thomsen, Susan Steiner, Stefanos Tsikas, Andreas Wagener, and seminar participants in Göttingen, Hannover, and London for their advice and input on previous versions of this paper. We further acknowledge helpful comments from participants at the Nordic Conference of Development Economics (Gothenburg), the Annual Conference of the International Quality of Life Society (Innsbruck), the World Conference of the Spatial Econometrics Association (Singapore), the Annual Conference of the Scottish Economic Society (Perth), the International Conference on Globalization and Development (Göttingen), and the Annual Congress of the European Economic Association (Köln) . Financial support by the German Research Foundation (DFG) via the Research Training Group 1723 and the Thailand Vietnam Socio Economic Panel (Project No. 283672937) is gratefully acknowledged. A supplementary online appendix is available with this article at The World Bank Economic Review website. 1 Subjective well-being can be defined as a function of an individual’s personality and their reactions to different life events (Stevenson and Wolfers 2008), or as Diener (2006, p. 400) puts it,“Subjective well-being is an umbrella term for the © The Author(s) 2022 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial License ([https://creativecommons.org/](https://creativecommons.org/)[ ](https://creativecommons.org/)[licenses/by-nc/4.0/](licenses/by-nc/4.0/)), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please [contact journals.permissions@ou

FAQs

What is the core difference between direct shock experience and tangential shock exposure?

Direct shock experience refers to individuals reporting actual shock impacts at the household level, while tangential shock exposure captures cases where individuals may witness a shock nearby without reporting direct experience, inferred from external measures.

How do the findings describe the effect of flood-shock proximity on subjective well-being?

Mere proximity to a potentially adverse flood shock, even without direct reported experience, can reduce subjective well-being.

Do the impacts of witnessing a flood shock affect only current well-being?

No. The paper finds the effect is not limited to the present and can also influence expected future well-being dynamics.

Jul 19, 2026

Upload by Oliver