Disaster Exposure and Household Financial Disruption

David W. Johnston and Sundar Ponnusamy

No 2026-05, Working Papers from Centre for Health Economics, Monash University

Abstract: How do households finance a costly, sudden shock? We study this question using natural disasters as a source of exogenous variation. Exploiting 15 waves of Australian longitudinal data and individual fixed-effects models, we estimate the effects of direct disaster exposure on household expenditure, income, assets, liabilities, and financial hardship, including coping margins that are typically unobserved in administrative data. Disaster exposure increases expenditure, driven by repair-related spending, while income and assets remain largely unchanged. The main adjustment occurs through significant increases in personal debt and informal financing. For many households, these responses are insufficient to avoid material deprivation, with increases in the likelihood of going without meals, missing utility payments, and being unable to heat the home. These effects are larger among households without insurance coverage and are concentrated in the year of the shock.

Keywords: disaster; debt; hardship; household finance (search for similar items in EconPapers)
JEL-codes: D14 G51 G52 Q54 (search for similar items in EconPapers)
Date: 2026-06-22
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papertool-v2-storage.s3.amazonaws.com/RePE ... 782091543313_228.pdf Full-text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mhe:chemon:paper_1782091543313_228

Ordering information: This working paper can be ordered from
https://www.monash.edu/business/che

Access Statistics for this paper

More papers in Working Papers from Centre for Health Economics, Monash University Centre for Health Economics, Monash University, 900 Dandenong Road, Caulfield East VIC 3145.. Contact information at EDIRC.
Bibliographic data for series maintained by Johannes Kunz ().