Earthquake Risk Information and Risk Aversive Behavior: Evidence from a Survey of Residents in Tokyo Metropolitan Area
AbstractThis paper analyzes the relationship between provision of earthquake risk information and residents' willingness to pay (WTP) for disaster risk reduction by the Contingent Valuation Method (CVM), using questionnaire survey data on the purchase of earthquake insurance in the Tokyo Metropolitan Area, Japan. Degree of disaster risk aversion and subjective probability of loss are estimated as parameters of expected utility function in a discrete choice model. The results suggest that when more precise and specific earthquake risk information is provided, residents of vulnerable houses are willing to pay more for disaster risk reduction, with larger subjective probability of loss, while those in safe houses are willing to pay slightly less, with a larger degree of risk aversion.
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Bibliographic InfoPaper provided by Osaka School of International Public Policy, Osaka University in its series OSIPP Discussion Paper with number 12E008.
Length: 34 pages
Date of creation: Oct 2012
Date of revision:
CVM; WTP; Earthquake Insurance; Risk Aversion; Subjective Probability of Loss;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-27 (All new papers)
- NEP-DCM-2012-10-27 (Discrete Choice Models)
- NEP-IAS-2012-10-27 (Insurance Economics)
- NEP-UPT-2012-10-27 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Philip Ganderton & David Brookshire & Michael McKee & Steve Stewart & Hale Thurston, 2000. "Buying Insurance for Disaster-Type Risks: Experimental Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 271-289, May.
- Masayuki Nakagawa & Makoto Saito & Hisaki Yamaga, 2009. "Earthquake Risks And Land Prices: Evidence From The Tokyo Metropolitan Area," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 208-222.
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