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Civil War, Natural Disaster and Risk Preferences: Evidence from Sri Lankan Twins

Nathan Kettlewell (), Fruhling Rijsdijk (), Sisira Siribaddana, Athula Sumathipala (), Agnieszka Tymula, Helena Zavos () and Nicholas Glozier ()
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Fruhling Rijsdijk: King's College London
Sisira Siribaddana: Rajarata University of Sri Lanka
Athula Sumathipala: Keele University
Helena Zavos: King's College London
Nicholas Glozier: University of Sydney

No 11901, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We estimate whether risk preferences are affected by traumatic events by using a unique survey of Sri Lankan twins which contains information on individual's exposure to the 2004 Indian Ocean Tsunami, participation as a combatant in the civil war, validated measures of mental health and risk preferences, and a rich set of control variables. Our estimation strategy utilises variation in experiences within twin pairs and allows us to explore whether preference changes are driven by wealth shocks and/or changes in mental health. We find that both events lead to less risk aversion, a result that is not driven by mental health or wealth changes.

Keywords: civil war; natural disaster; risk preferences; twin study (search for similar items in EconPapers)
JEL-codes: D74 D81 D91 Q54 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2018-10
New Economics Papers: this item is included in nep-dev, nep-env and nep-hea
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