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Earthquake Risk Information and Risk Aversive Behavior: Evidence from a Survey of Residents in Tokyo Metropolitan Area

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Author Info

  • Yasuo Kawawaki

    (Visiting Professor, Osaka School of International Public Policy (OSIPP))

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    Abstract

    This 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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    File URL: http://www.osipp.osaka-u.ac.jp/archives/DP/2012/DP2012E008.pdf
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    Bibliographic Info

    Paper provided by Osaka School of International Public Policy, Osaka University in its series OSIPP Discussion Paper with number 12E008.

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    Length: 34 pages
    Date of creation: Oct 2012
    Date of revision:
    Handle: RePEc:osp:wpaper:12e008

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    Related research

    Keywords: CVM; WTP; Earthquake Insurance; Risk Aversion; Subjective Probability of Loss;

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    1. 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.
    2. 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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