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Resilience in the Wake of Disaster: The Role of Social Capital in Mitigating Long-Term Well-Being Losses

Author

Listed:
  • Budría, Santiago

    (Universidad Nebrija)

  • Betancourt-Odio, Alejandro

    (Universidad Pontificia Comillas)

  • Fonseca, Marlene

    (Universidad Nebrija)

Abstract

Climate change is intensifying the frequency and severity of weather-related natural disasters. These events generate significant monetary and non-monetary costs, undermining individual and societal well-being. Using a nationally representative longitudinal dataset from Australia, this study explores the dynamics of well-being before, during, and after natural disasters, with a particular focus on the mediating role of social capital. We employ an event-study design with individual fixed effects to capture both immediate and long-term effects of natural disasters on four critical dimensions of well- being: financial satisfaction, safety satisfaction, mental health, and psychological distress. Our findings reveal that the adverse impacts of natural disasters are profound and long-lasting, persisting in some cases for over 6–7 years, with well-being implications exceeding $1,500,000 in equivalent losses. We find that social capital emerges as a powerful buffer, significantly mitigating declines in safety satisfaction and mental health while reducing psychological distress both during and after disasters.

Suggested Citation

  • Budría, Santiago & Betancourt-Odio, Alejandro & Fonseca, Marlene, 2025. "Resilience in the Wake of Disaster: The Role of Social Capital in Mitigating Long-Term Well-Being Losses," IZA Discussion Papers 17907, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17907
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    References listed on IDEAS

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    More about this item

    Keywords

    mental health; hedonic adaptation; panel fixed-effects; well-being; psychological distress;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • G50 - Financial Economics - - Household Finance - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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