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Disaster experience and resident risk preference: Evidence from China household finance survey

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  • Linan Guo
  • Weiming He
  • Jiaxue Wang

Abstract

China is one of the countries hardest hit by disasters. Disaster shocks not only cause a large number of casualties and property damage but also have an impact on the risk preference of those who experience it. Current research has not reached a consensus conclusion on the impact of risk preferences. This paper empirically analyzes the effects of natural and man-made disasters on residents’ risk preference based on the data of the China Household Financial Survey (CHFS) in 2019. The results indicate that: (1) Both natural and man-made disasters can significantly lead to an increase in the risk aversion of residents, and man-made disasters have a greater impact. (2) Education background plays a negative moderating role in the impact of man-made disasters on residents’ risk preference. (3) Natural disaster experiences have a greater impact on the risk preference of rural residents, while man-made disaster experiences have a greater impact on the risk preference of urban residents. Natural disaster experiences make rural residents more risk-averse, while man-made disaster experiences make urban residents more risk-averse. The results provide new evidence and perspective on the negative impact of disaster shocks on the social life of residents.

Suggested Citation

  • Linan Guo & Weiming He & Jiaxue Wang, 2023. "Disaster experience and resident risk preference: Evidence from China household finance survey," PLOS ONE, Public Library of Science, vol. 18(11), pages 1-13, November.
    • Handle: RePEc:plo:pone00:0295146
    DOI: 10.1371/journal.pone.0295146
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