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Natural Disaster Expectations and Household Adaptation

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  • Shifrah Aron-Dine

Abstract

How do households form expectations about the risk of future natural disasters, and how do these expectations translate into household adaptation choices? A stylized model of natural disasters yields predictions that higher perceived risk should increase precautionary savings, protective investments, insurance take-up, and out-migration. Using survey data from Puerto Rico collected after Hurricane Maria, I find that households are quite pessimistic about future hurricane risk. However, adaptation responses are muted, and the relationship between disaster expectations and adaptation decisions is limited. These patterns raise important puzzles about household responses to natural disaster risk.

Suggested Citation

  • Shifrah Aron-Dine, 2026. "Natural Disaster Expectations and Household Adaptation," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 527-531, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:527-531
    DOI: 10.1257/pandp.20261028
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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