IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i16p8912-d611199.html
   My bibliography  Save this article

Resilience toward Volcanic Eruptions: Risk Perception and Disaster Microinsurance in Yogyakarta, Indonesia

Author

Listed:
  • Aloysius Gunadi Brata

    (Department of Economics, Atma Jaya Yogyakarta University, Yogyakarta 55281, Indonesia)

  • Henri L. F. de Groot

    (Department of Spatial Economics, VU University Amsterdam, 1081 HV Amsterdam, The Netherlands)

  • Piet Rietveld

    (Department of Spatial Economics, VU University Amsterdam, 1081 HV Amsterdam, The Netherlands
    Piet Rietveld has passed away.)

  • Budy P. Resosudarmo

    (Arndt-Corden Department of Economics, Australian National University, Canberra, ACT 2601, Australia)

  • Wouter Zant

    (Department of Economics, VU University Amsterdam, 1081 HV Amsterdam, The Netherlands)

Abstract

Disaster microinsurance has been argued to enhance people’s resilience toward natural hazards. In developing countries, however, the uptake of this insurance scheme has been limited. This paper investigates the influence of the perception of disaster risks on the probability of local people participating in a hypothetical disaster microinsurance scheme. We use household data to assess a specific disaster risk, notably the risk of an eruption of the Mount Merapi in Yogyakarta. We find that this perception positively influences the interest to participate in disaster microinsurance. We also find that insurance literacy has a strong positive relationship with the respondent’s interest to participate in disaster microinsurance.

Suggested Citation

  • Aloysius Gunadi Brata & Henri L. F. de Groot & Piet Rietveld & Budy P. Resosudarmo & Wouter Zant, 2021. "Resilience toward Volcanic Eruptions: Risk Perception and Disaster Microinsurance in Yogyakarta, Indonesia," Sustainability, MDPI, vol. 13(16), pages 1-16, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:8912-:d:611199
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/16/8912/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/16/8912/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. World Bank, 2012. "Advancing Disaster Risk Financing and Insurance in ASEAN Member States : Framework and Options for Implementation, Volume 1. Main report," World Bank Publications - Reports 12627, The World Bank Group.
    2. Ming Wang & Chuan Liao & Saini Yang & Weiting Zhao & Min Liu & Peijun Shi, 2012. "Are People Willing to Buy Natural Disaster Insurance in China? Risk Awareness, Insurance Acceptance, and Willingness to Pay," Risk Analysis, John Wiley & Sons, vol. 32(10), pages 1717-1740, October.
    3. Yoshito Takasaki, 2011. "Do Local Elites Capture Natural Disaster Reconstruction Funds?," Journal of Development Studies, Taylor & Francis Journals, vol. 47(9), pages 1281-1298, May.
    4. Craig Churchill, 2002. "Trying to understand the demand for microinsurance," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(3), pages 381-387.
    5. Martin Eling & Shailee Pradhan & Joan T Schmit, 2014. "The Determinants of Microinsurance Demand," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(2), pages 224-263, April.
    6. Brown, Philip & Daigneault, Adam J. & Tjernström, Emilia & Zou, Wenbo, 2018. "Natural disasters, social protection, and risk perceptions," World Development, Elsevier, vol. 104(C), pages 310-325.
    7. Stephen G. Fier & James M. Carson, 2015. "Catastrophes and the Demand for Life Insurance," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 38(2), pages 125-156.
    8. Michael Siegrist & Heinz Gutscher, 2006. "Flooding Risks: A Comparison of Lay People's Perceptions and Expert's Assessments in Switzerland," Risk Analysis, John Wiley & Sons, vol. 26(4), pages 971-979, August.
    9. Andrew Royal & Margaret Walls, 2019. "Flood Risk Perceptions and Insurance Choice: Do Decisions in the Floodplain Reflect Overoptimism?," Risk Analysis, John Wiley & Sons, vol. 39(5), pages 1088-1104, May.
    10. Yogi Vidyattama & Riyana Miranti & Budy P. Resosudarmo, 2014. "The Role of Health Insurance Membership in Health Service Utilisation in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(3), pages 393-413, December.
    11. World Bank, 2012. "Advancing Disaster Risk Financing and Insurance in ASEAN Member States : Framework and Options for Implementation, Volume 2. Technical Appendices," World Bank Publications - Reports 12628, The World Bank Group.
    12. Platteau, Jean-Philippe & De Bock, Ombeline & Gelade, Wouter, 2017. "The Demand for Microinsurance: A Literature Review," World Development, Elsevier, vol. 94(C), pages 139-156.
    13. Michio Naoi & Miki Seko & Kazuto Sumita, 2010. "Community Rating, Cross Subsidies and Underinsurance: Why so many Households in Japan do not Purchase Earthquake Insurance," The Journal of Real Estate Finance and Economics, Springer, vol. 40(4), pages 544-561, May.
    14. Ortwin Renn, 2004. "Perception of Risks," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(1), pages 102-114, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aloysius G. Brata & Piet Rietveld & Henri L.F. de Groot & Budy P. Resosudarmo & Wouter Zant, 2014. "Living with the Merapi Volcano: Risks and Disaster Microinsurance," Departmental Working Papers 2014-13, The Australian National University, Arndt-Corden Department of Economics.
    2. Renuka Sane & Susan Thomas, 2020. "From Participation To Repurchase: Low Income Households And Micro‐insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(3), pages 783-814, September.
    3. Jantsje M. Mol & W. J. Wouter Botzen & Julia E. Blasch & Hans de Moel, 2020. "Insights into Flood Risk Misperceptions of Homeowners in the Dutch River Delta," Risk Analysis, John Wiley & Sons, vol. 40(7), pages 1450-1468, July.
    4. Hanna Freudenreich & Sindu W. Kebede, 2022. "Experience of shocks, household wealth and expectation formation: Evidence from smallholder farmers in Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 53(5), pages 756-774, September.
    5. Fabrizio Terenzio Gizzi & Jonghun Kam & Donatella Porrini, 2020. "Time windows of opportunities to fight earthquake under-insurance: evidence from Google Trends," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-11, December.
    6. Delin Liu & Mengjie Li & Yue Li & Hao Chen, 2022. "Assessment of Public Flood Risk Perception and Influencing Factors: An Example of Jiaozuo City, China," Sustainability, MDPI, vol. 14(15), pages 1-15, August.
    7. Aloysius Gunadi Brata & Henri L. F. de Groot & Wouter Zant, 2018. "The Impact of the 2006 Yogyakarta Earthquake on Local Economic Growth," Economics of Disasters and Climate Change, Springer, vol. 2(2), pages 203-224, July.
    8. Villacin, Deanna T., 2017. "A Review of Philippine Government Disaster Financing for Recovery and Reconstruction," Discussion Papers DP 2017-21, Philippine Institute for Development Studies.
    9. John Beirne & Nuobu Renzhi & Ulrich Volz, 2021. "Bracing for the Typhoon: Climate change and sovereign risk in Southeast Asia," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(3), pages 537-551, May.
    10. Jinan N. Allan & Joseph T. Ripberger & Wesley Wehde & Makenzie Krocak & Carol L. Silva & Hank C. Jenkins‐Smith, 2020. "Geographic Distributions of Extreme Weather Risk Perceptions in the United States," Risk Analysis, John Wiley & Sons, vol. 40(12), pages 2498-2508, December.
    11. Yu Yan & Michael Faure, 2021. "Government interventions in microinsurance: evidence from China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 440-467, July.
    12. Zulekha Ndurukia & Agnes W. Njeru & Esther Waiganjo, 2017. "Factors Influencing Demand for Micro Insurance Services in the Insurance Industry in Kenya," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(7), pages 232-259, July.
    13. Meike Will & Jürgen Groeneveld & Karin Frank & Birgit Müller, 2021. "Informal risk-sharing between smallholders may be threatened by formal insurance: Lessons from a stylized agent-based model," PLOS ONE, Public Library of Science, vol. 16(3), pages 1-18, March.
    14. Will, Meike & Groeneveld, Jürgen & Lenel, Friederike & Frank, Karin & Müller, Birgit, 2023. "Determinants of Household Vulnerability in Networks with Formal Insurance and Informal Risk-Sharing," Ecological Economics, Elsevier, vol. 212(C).
    15. Platteau, Jean-Philippe & De Bock, Ombeline & Gelade, Wouter, 2017. "The Demand for Microinsurance: A Literature Review," World Development, Elsevier, vol. 94(C), pages 139-156.
    16. Fabio Pizzutilo & Elisabetta Venezia, 2018. "Are catastrophe bonds effective financial instruments in the transport and infrastructure industries? Evidence from international financial markets," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(2), pages 256-267, April.
    17. Lucia Dalla Pellegrina & Giorgio Di Maio & Paolo Landoni & Emanuele Rusinà, 2021. "Money management and entrepreneurial training in microfinance: impact on beneficiaries and institutions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 1049-1085, October.
    18. Borisova, Ekaterina & Gründler, Klaus & Hackenberger, Armin & Harter, Anina & Potrafke, Niklas & Schoors, Koen, 2023. "Crisis experience and the deep roots of COVID-19 vaccination preferences," European Economic Review, Elsevier, vol. 160(C).
    19. Niculaescu, Corina E. & Sangiorgi, Ivan & Bell, Adrian R., 2023. "Does personal experience with COVID-19 impact investment decisions? Evidence from a survey of US retail investors," International Review of Financial Analysis, Elsevier, vol. 88(C).
    20. Rebecca E. Morss & Julie L. Demuth & Ann Bostrom & Jeffrey K. Lazo & Heather Lazrus, 2015. "Flash Flood Risks and Warning Decisions: A Mental Models Study of Forecasters, Public Officials, and Media Broadcasters in Boulder, Colorado," Risk Analysis, John Wiley & Sons, vol. 35(11), pages 2009-2028, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:8912-:d:611199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.