We investigate whether individuals' risk preferences change after experiencing a natural disaster, specifically, the 2011 Great East Japan Earthquake. Exploiting the panels of nationally representative surveys on risk preferences, we find that men who experienced greater intensity of the earthquake became more risk tolerant a year after the Earthquake. Interestingly, the effects on men's risk preferences are persistent even five years after the Earthquake at almost the same magnitude as those shortly after the Earthquake. Furthermore, these men gamble more, which is consistent with the direction of changes in risk preferences. We find no such pattern for women. (JEL D12, D81, J16, Q54)

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We investigate whether experiencing a natural disaster-the Great East Japan Earthquake in 2011-changes individuals'risk preferences. The novelty of our study is that we use panel data, and we can track the change in risk preference of the same individuals before and after the Earthquake. Previous studies use cross-section data collected after the negative shocks have occurred, and hence can be biased by unobserved individual heterogeneity. We …nd that people who experienced larger intensity of the Earthquake become more risk tolerant. Interestingly, all the results are driven by men. Further, we …nd corroborative evidence that men become more engaged in gambling and drinking if they were more exposed to the Earthquake. Finally, we compare the estimates from cross-section and panel speci…cations, and demonstrate that the estimate relying on cross-section data may be biased.

We investigate whether individuals' risk preferences change after experiencing a natural disaster, specifically, the 2011 Great East Japan Earthquake. Exploiting the panels of nationally representative surveys on risk preferences, we find that men who experienced greater intensity of the Earthquake became more risk tolerant after the Earthquake. Furthermore, these men gamble more, which is consistent with the direction of changes in risk preferences. We find no such pattern for women. Finally, the effects on men's risk preferences are persistent even five years after the Earthquake at almost the same magnitude as those shortly after the Earthquake.

No abstract