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Insuring Well-Being: Psychological Adaptation to Disasters

Author

Listed:
  • Sunbin Yoo

    (Kyushu University)

  • Junya Kumagai

    (Kyushu University)

  • Yuta Kawabata

    (Kyushu University)

  • Alexander Ryota Keeley

    (Kyushu University)

  • Shunsuke Managi

    (Kyushu University)

Abstract

We examine the impact of life and health insurance spending on subjective well-being. Taking advantage of insurance spending and subjective well-being data on more than 700,000 individuals in Japan, we examine whether insurance spending can buffer declines in subjective well-being due to exposure to mass disaster. We find that insurance spending can buffer drops in subjective well-being by approximately 3–6% among those who experienced the mass disaster of the great East Japan earthquake. Subjective health increases the most, followed by life satisfaction and happiness. On the other hand, insurance spending decreases the subjective well-being of those who did not experience the earthquake by approximately 3–7%. We conclude by monetizing the subjective well-being loss and calculating the extent to which insurance spending can compensate for it. The monetary value of subjective well-being buffered through insurance spending is approximately 33,128 USD for happiness, 33,287 USD for life satisfaction, and 19,597 USD for subjective health for a person in one year. Therefore, we confirm that life/health insurance serves as an ideal option for disaster adaptation. Our findings indicate the importance of considering subjective well-being, which is often neglected when assessing disaster losses.

Suggested Citation

  • Sunbin Yoo & Junya Kumagai & Yuta Kawabata & Alexander Ryota Keeley & Shunsuke Managi, 2022. "Insuring Well-Being: Psychological Adaptation to Disasters," Economics of Disasters and Climate Change, Springer, vol. 6(3), pages 471-494, November.
    • Handle: RePEc:spr:ediscc:v:6:y:2022:i:3:d:10.1007_s41885-022-00114-w
    DOI: 10.1007/s41885-022-00114-w
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    More about this item

    Keywords

    Risk; Insurance; Great East Japan earthquake; Subjective well-being;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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