One-minute earthquake, years of patience: Evidence from Mexico on the effect of earthquake exposure on time preference

Pierre-Guillaume Méon, Robin Rampaer and David Raymaekers

No 21-015, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: Using a survey of nearly 20,000 Mexican residents matched with data on 50 earthquakes, we observe evidence that people affected by an earthquake report a lower discount rate, implying greater patience. The effect is stronger for more intense earthquakes and is robust to controlling for a series of socioeconomic variables, locality, and event fixed effects. It is not driven by changes in risk aversion, expected future income streams, or life expectancy, nor is it impacted by people moving in or out of affected localities. People react in the same way regardless of their age at the time of the earthquake, in line with the life-long openness hypothesis. Estimates suggest that the effect of more intense earthquakes diminishes slowly, persisting over decades. This effect is independent of gender but varies with education and wealth. Finally, respondents who have experienced an earthquake adjust their savings and health-related behaviors in ways consistent with a decrease in their discount rate.

Keywords: Natural disasters; Time preference (search for similar items in EconPapers)
JEL-codes: D91 Q54 (search for similar items in EconPapers)
Date: 2021-08-17
New Economics Papers: this item is included in nep-hea and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/330528/3/wp21015.pdf Full text for the whole work, or for a work part (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:sol:wpaper:2013/330528

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/330528

Access Statistics for this paper

More papers in Working Papers CEB from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels (bpauwels@ulb.ac.be).