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Earthquake Risk and a Quality of Life Index

In: Housing Markets and Household Behavior in Japan

Author

Listed:
  • Miki Seko

    (Musashino University)

Abstract

Japan is famous for its earthquakes. How do households and firms respond to this potentially devastating risk? How does earthquake riskEarthquake risk affect housing costs and wages? To answer these questions, we construct a Quality of Life Index (QOLI)Quality of Life Index (QOLI) and estimate the pecuniary cost of earthquake risk among cities/counties in Japan. The regional QOLI is obtained through estimating the hedonic wage and housing regressionsHedonic wage and housing regressions using household longitudinal data covering all Japan. From the estimated results, we find that earthquake risk has a significant impact on the overall quality of life in Japanese prefectures, and that there are large city/county differences in terms of the pecuniary cost of earthquake riskPecuniary cost of earthquake risk . Finally, we argue that the large regional variation in the pecuniary cost of earthquakes arises from earthquake insurance market imperfectionsEarthquake insurance market imperfections —crude and rough geographical risk rating—and propose a possible remedy for enhancing earthquake insurance risk assessmentEarthquake insurance risk assessment .

Suggested Citation

  • Miki Seko, 2019. "Earthquake Risk and a Quality of Life Index," Advances in Japanese Business and Economics, in: Housing Markets and Household Behavior in Japan, chapter 0, pages 157-175, Springer.
    • Handle: RePEc:spr:advchp:978-981-13-3369-9_8
    DOI: 10.1007/978-981-13-3369-9_8
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