Insuring Well-being: Psychological Adaptation to Disasters

Sunbin Yoo (), Yuta Kawabata, Junya Kumagai, Alexander Keeley and Shunsuke Managi

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the impact of life and health insurance spending on subjective well-being. Taking advantage of insurance spending and subjective well-being data on more than 700,000 individuals in Japan, we examine whether insurance spending can buffer declines in subjective well-being due to exposure to mass disaster. We find that insurance spending can buffer drops in subjective well-being by approximately 3-6% among those who experienced the mass disaster of the great East Japan earthquake. Subjective health increases the most, followed by life satisfaction and happiness. On the other hand, insurance spending decreases the subjective well-being of those who did not experience the earthquake by approximately 3-7%. We conclude by monetizing the subjective well-being loss and calculating the extent to which insurance spending can compensate for it. The monetary value of subjective well-being buffered through insurance spending is approximately 33,128 USD for happiness, 33,287 USD for life satisfaction, and 19,597 USD for subjective health for a person in one year. Therefore, we confirm that life/health insurance serves as an ideal option for disaster adaptation. Our findings indicate the importance of considering subjective well-being, which is often neglected when assessing disaster losses.

Keywords: Risk; Insurance; Great East Japan Earthquake; Subjective Well-being (search for similar items in EconPapers)
JEL-codes: H0 I13 Q5 Q54 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-env, nep-fle, nep-hap, nep-hea and nep-ias
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Journal Article: Insuring Well-Being: Psychological Adaptation to Disasters (2022)
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