Long-term behavioral responses to man-made disasters: Insights from the Agent Orange experiment in Vietnam

Ralitza Dimova, Ulrike Grote and Arnab Basu

TVSEP Working Papers from Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP

Abstract: Do man-made disasters induce permanent behavioral changes? While the temporary link between negative shocks and risk aversion has been analysed, the evolution of risk profiles over time in response to a negative shock remains unexplored. Using panel data from Agent Orange affected areas in Vietnam, we explore (i) whether individuals in a disaster-prone area are more risk tolerant vis-à -vis those who are unaffected, (ii) whether risk tolerance declines and the willingness to invest increases, with the decreasing intensity of the harm in the disaster affected area, and (iii) what factors influence individuals’ residency within disaster affected areas. We find that individuals living within an Agent Orange affected area are relatively more risk loving but this risk tolerance decreases with the decreasing intensity of harm over time. Residency within the disaster area is influenced by the level of human capital and ownership of physical capital.

Keywords: Vietnam; Agent Orange; Risk Profiles; Propensity Score Matching (search for similar items in EconPapers)
JEL-codes: C93 D1 Q51 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2022-07
New Economics Papers: this item is included in nep-env and nep-sea
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