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Civil War, Natural Disaster and Risk Preferences: Evidence from Sri Lankan Twins

Author

Listed:
  • Kettlewell, Nathan

    (University of Technology, Sydney)

  • Rijsdijk, Fruhling

    (King's College London)

  • Siribaddana, Sisira

    (Rajarata University of Sri Lanka)

  • Sumathipala, Athula

    (Keele University)

  • Tymula, Agnieszka

    (University of Sydney)

  • Zavos, Helena

    (King's College London)

  • Glozier, Nicholas

    (University of Sydney)

Abstract

We estimate whether risk preferences are affected by traumatic events by using a unique survey of Sri Lankan twins which contains information on individual's exposure to the 2004 Indian Ocean Tsunami, participation as a combatant in the civil war, validated measures of mental health and risk preferences, and a rich set of control variables. Our estimation strategy utilises variation in experiences within twin pairs and allows us to explore whether preference changes are driven by wealth shocks and/or changes in mental health. We find that both events lead to less risk aversion, a result that is not driven by mental health or wealth changes.

Suggested Citation

  • Kettlewell, Nathan & Rijsdijk, Fruhling & Siribaddana, Sisira & Sumathipala, Athula & Tymula, Agnieszka & Zavos, Helena & Glozier, Nicholas, 2018. "Civil War, Natural Disaster and Risk Preferences: Evidence from Sri Lankan Twins," IZA Discussion Papers 11901, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11901
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    References listed on IDEAS

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    More about this item

    Keywords

    civil war; natural disaster; risk preferences; twin study;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • 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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