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Exploring the Role of Emotions in Decisions Involving Catastrophic Risks: Lessons from a Double Investigation

In: The Economics of the Global Environment

Author

Listed:
  • Olivier Chanel

    (Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS)

  • Graciela Chichilnisky

    (Columbia University)

  • Sébastien Massoni

    (Queensland University of Technology)

  • Jean-Christophe Vergnaud

    (CNRS - Université de Paris I)

Abstract

Natural disasters due to climate change (like floods, hurricanes, heat waves or droughts) combine a risk of large losses and a low probability of occurrence, requiring decisions to be made in uncertain universes. However, the inability of standard decision under uncertainty models to provide rankings when some outcomes are catastrophic impedes rational (public) decision-making. This paper examines the role of emotions in individuals’ choices among alternatives involving catastrophic events, either in real life (flooding) or artificial (laboratory experiment) situations. We report a survey on 599 respondents aimed at determining how people exposed to different levels of flood risk form beliefs and make decisions under uncertainty before and after emotion-generating events. Data on their emotions, the emotions they expect to experience, their personality and psychological determinants, their symptoms before and after emotion-generating events are collected and analyzed. In parallel with this survey, experimental protocols replicate the emotional experience of a catastrophe and measure its impact on behavior and formation of beliefs. Emotions are induced by framing effects and measured through a self-declared worry scale. We collect behavioral data (insurance choice, subjective beliefs, performance) and measure how they are affected by the emotions felt during the decision-making. These protocols test some assumptions in the survey using experimental paradigms from psychophysics that allow us to control the sources of uncertainty experienced by the subjects. Results confirm that emotions connected with the nature of the risk can significantly affect desire to reduce it. The survey provides valuable material for comparative analysis, revealing how actual experience of an anticipated event affects decisions. The experiments show that emotions affect the decision-making process and the forming of probabilistic beliefs.

Suggested Citation

  • Olivier Chanel & Graciela Chichilnisky & Sébastien Massoni & Jean-Christophe Vergnaud, 2016. "Exploring the Role of Emotions in Decisions Involving Catastrophic Risks: Lessons from a Double Investigation," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 553-575, Springer.
    • Handle: RePEc:spr:steccp:978-3-319-31943-8_24
    DOI: 10.1007/978-3-319-31943-8_24
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    Cited by:

    1. Victor Champonnois & Katrin Erdlenbruch, 2020. "Willingness of households to reduce flood risk in southern France," Working Papers hal-02586069, HAL.

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