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Observing traumatic events: Indirect effects of flood shocks on well-being and preferences

Wiebke Stein and Reinhard Weisser

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: This paper investigates how witnessing adverse weather events affects individuals' perceptions and consequently their personal well-being. To identify potential exposure to a weather shock, we link satellite-based data on flooding to an extensive household panel survey from rural Southeast Asia. We find that mere proximity to a potentially adverse shock, even without reporting any actual experience of the shock, can be sufficient to reduce individual well-being levels. This effect is not only restricted to the present but can also impinge on expected future well-being dynamics. Such a persistent distortionary effect from witnessing a weather shock may also have politico-economic repercussions by, for instance, altering support for redistributive policies.

Keywords: Environmental shocks; Perception; Subjective well-being; GIS data; MODIS flood mapping (search for similar items in EconPapers)
JEL-codes: I31 Q51 R23 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2020-11
New Economics Papers: this item is included in nep-agr, nep-env, nep-hap and nep-sea
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