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Hiding Behind the Veil of Ashes: Social Capital in the Wake of Natural Disasters

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  • Victor Stéphane

    () (Univ. Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France)

Abstract

This paper investigates the impact of natural disasters on social capital. By heterogeneously affecting people in a community, natural disasters create a temporary information asymmetry on their post-disaster income. Using an original dataset collected in rural Ecuador, we provide suggestive evidence that households use this asymmetric information to pretend to be poorer than they actually are, in order to escape from solidarity mechanisms in the aftermath of the shock. The magnitude of this effect decreases with the level of wealth inequality in the community and vanishes in the most unequal communities where bilateral cooperation is rather fostered.

Suggested Citation

  • Victor Stéphane, 2020. "Hiding Behind the Veil of Ashes: Social Capital in the Wake of Natural Disasters," Working Papers 2021, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    • Handle: RePEc:gat:wpaper:2021
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Social Capital; Moral Hazard; Asymmetric Information; Volcanic Eruptions; Ecuador;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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