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Using standard risk games with real money and randomly selected participants in rural Indonesia, the study finds that people who recently faced floods or earthquakes become more risk-averse. Disasters alter beliefs by increasing perceived background risk for future disasters, leading to fewer risky choices. Experimental risk behavior also correlates with real-life risk behavior, supporting the practical relevance of the findings.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/risk-taking-behavior-in-the-wake-of-natural-disasters/290992/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/risk-taking-behavior-in-the-wake-of-natural-disasters/290992.png","ImageObject",300,407,{"name":92,"@type":93},"Kurz","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-29","2026-09-17",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"How does the paper test whether natural disasters affect risk-taking behavior?","Question",{"text":113,"@type":114},"It uses real-money standard risk games with randomly selected individuals in rural Indonesia and links decisions to recent disaster exposure.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What happens to individuals’ risk attitudes after experiencing a flood or earthquake?",{"text":118,"@type":114},"Individuals who recently suffered a flood or earthquake exhibit more risk aversion and are less likely to make risky choices.",{"name":120,"@type":111,"acceptedAnswer":121},"Why do the authors argue risk-taking changes after disasters?",{"text":122,"@type":114},"The paper concludes that disasters shift perceived background risk, causing people to believe future disasters are more likely and severe, which reduces risk-taking.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},290992,1789643140,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":140,"language":141,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":142,"faqs":143,"seo_title":144,"seo_description":67,"update_tm":130,"read_time":145,"preview_page_count":4},2336478945635,"https://ap-avatar.wpscdn.com/davatar_6f874abed73319feea01a86fa6f0fab8","NBER WORKING PAPER SERIES  \nRISK-TAKING BEHAVIOR IN THE WAKE OF NATURAL DISASTERS  \nLisa Cameron  \nManisha Shah  \nWorking Paper 19534  \n[http://www.nber.org/papers/w19534](http://www.nber.org/papers/w19534)  \nNATIONAL BUREAU OF ECONOMIC RESEARCH  \n1050 Massachusetts Avenue  \nCambridge, MA 02138  \nOctober 2013  \nThe authors gratefully acknowledge funding from the Australian Research Council. ARC Grant No. DP0987011. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.  \nNBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.  \n© 2013 by Lisa Cameron and Manisha Shah. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.  \nRisk-Taking Behavior in the Wake of Natural Disasters Lisa Cameron and Manisha Shah  \nNBER Working Paper No. 19534 October 2013  \nJEL No. D81,O12,Q54  \nABSTRACT  \nWe investigate whether experiencing a natural disaster affects risk-taking behavior. We conduct standard risk games (using real money) with randomly selected individuals in rural Indonesia. We find that individuals who recently suffered a flood or earthquake exhibit more risk aversion. Experiencing a natural disaster causes people to perceive that they now face a greater risk of a future disaster. We conclude that this change in perception of background risk causes people to take fewer risks. We provide evidence that experimental risk behavior is correlated with real life risk behavior, highlighting the importance of our results.  \nLisa Cameron Monash University Australia  \nand IZA  \n[lisa.cameron@monash.edu](lisa.cameron@monash.edu)  \nManisha Shah  \nDepartment of Public Policy University of California, Los Angeles Luskin School of Public Affairs 3250 Public Affairs Building Los Angeles, CA 90095-1656 and NBER  \n[manishashah@ucla.edu](manishashah@ucla.edu)  \nOver the last decade, direct losses from natural disasters in the developing world averaged 35 billion USD annually. These losses are increasing and are more than eight times greater than the losses su􀀋ered as a result of natural disasters during the 1960's (EM-DAT, 2009) . Three main categories of natural disasters account for 90% of the world's direct losses: 􀀍oods, earthquakes, and tropical cyclones. A disproportionate share of the deaths and damage caused by such environmental shocks is borne by people in developing countries (Kahn, 2005) . Developing countries are not necessarily more susceptible to natural disasters, but the impact is often more severe due to poor building practices and lack of adequate infrastructure. The enormity of these losses has focused attention on how natural disasters can undermine countries long-term e􀀋orts to attain and sustain economic growth (Freeman, 2000) . This is becoming an increasingly important issue as climate change scientists have predicted an increase in the frequency of disasters like 􀀍oods and tropical cyclones (IPCC, 2001) .  \nNatural disasters are traumatic events and it is thus likely that they a􀀋ect individuals' behavior in the short and possibly longer term. If natural disasters a􀀋ect people's perceptions of the riskiness of their environment, then experiencing a disaster can be thought of as an addition of background risk and if people are \\risk-vulnerable,\" in the sense of Gollier and Pratt (1996), they will then exhibit more risk-averse behavior. This could have potential dampening e􀀋ects on post-recovery growth if, for example, people are less willing to be entrepreneurial, particularly since aid money is often infused into natural disaster sites just after the disaster occurs, and consequently the cost of more risk averse behavior at this time is heightened. Psychological ","cbCaisPmGuCxlqxI","https://ap.wps.com/l/cbCaisPmGuCxlqxI","pdf",1881782,43,"English","# Abstract\n## Research question and approach\n## Main findings on risk-taking\n## Belief updating and background risk\n## Relevance to real-life behavior","[{\"question\":\"How does the paper test whether natural disasters affect risk-taking behavior?\",\"answer\":\"It uses real-money standard risk games with randomly selected individuals in rural Indonesia and links decisions to recent disaster exposure.\"},{\"question\":\"What happens to individuals’ risk attitudes after experiencing a flood or earthquake?\",\"answer\":\"Individuals who recently suffered a flood or earthquake exhibit more risk aversion and are less likely to make risky choices.\"},{\"question\":\"Why do the authors argue risk-taking changes after disasters?\",\"answer\":\"The paper concludes that disasters shift perceived background risk, causing people to believe future disasters are more likely and severe, which reduces risk-taking.\"}]","Risk-Taking Behavior in the Wake of Natural Disasters | PDF",108]