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Do Natural Disasters Stimulate Individual Saving? Evidence from a Natural Experiment in a Highly Developed Country

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  • Berlemann, Michael

    () (Helmut Schmidt University, Hamburg)

  • Steinhardt, Max F.

    () (Free University of Berlin)

  • Tutt, Jascha

    () (Helmut Schmidt University, Hamburg)

Abstract

While various empirical studies have found negative growth-effects of natural disasters, little is yet known about the microeconomic channels through which disasters might affect short- and especially long-term growth. This paper contributes to filling this gap in the literature by studying how natural disasters affect individual saving decisions. This study makes use of a natural experiment created by the European Flood of August 2002. Using micro data from the German Socio-Economic Panel that we combine with geographic flood data, we compare the savings behavior of affected and non-affected individuals by using a difference-in-differences approach. Our empirical results indicate that natural disasters depress individual saving decisions, which might be the consequence of a Samaritan's Dilemma.

Suggested Citation

  • Berlemann, Michael & Steinhardt, Max F. & Tutt, Jascha, 2015. "Do Natural Disasters Stimulate Individual Saving? Evidence from a Natural Experiment in a Highly Developed Country," IZA Discussion Papers 9026, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9026
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    Cited by:

    1. Andor, Mark A. & Osberghaus, Daniel & Simora, Michael, 2020. "Natural Disasters and Governmental Aid: Is there a Charity Hazard?," Ecological Economics, Elsevier, vol. 169(C).
    2. Kevin Luo & Tomoko Kinugasa, 2018. "Do natural disasters influence long-term saving?: Assessing the impact of the 2008 Sichuan earthquake on household saving rates using synthetic control," Discussion Papers 1804, Graduate School of Economics, Kobe University.
    3. Becchetti, Leonardo & Castriota, Stefano & Conzo, Pierluigi, 2017. "Disaster, Aid, and Preferences: The Long-run Impact of the Tsunami on Giving in Sri Lanka," World Development, Elsevier, vol. 94(C), pages 157-173.
    4. Mirpourian, Mehrdad, 2020. "A Gendered Look at Savings Behavior among Nigerian Microsavers," MPRA Paper 103062, University Library of Munich, Germany.
    5. Michael Berlemann & Daniela Wenzel, 2018. "Precipitation and Economic Growth," CESifo Working Paper Series 7258, CESifo.
    6. Berlemann, Michael & Wenzel, Daniela, 2018. "Hurricanes, economic growth and transmission channels," World Development, Elsevier, vol. 105(C), pages 231-247.
    7. Berlemann, Michael, 2016. "Does hurricane risk affect individual well-being? Empirical evidence on the indirect effects of natural disasters," Ecological Economics, Elsevier, vol. 124(C), pages 99-113.
    8. Mirpourian, Mehrdad, 2020. "A Gendered Look at Savings Behavior among Nigerian Microsavers," MPRA Paper 103221, University Library of Munich, Germany.
    9. Michael Berlemann & Max Friedrich Steinhardt, 2017. "Climate Change, Natural Disasters, and Migration—a Survey of the Empirical Evidence," CESifo Economic Studies, CESifo, vol. 63(4), pages 353-385.
    10. Mahdi Moudi & Shiyu Yan & Bahador Bahramimianrood & Xiaoping Li & Liming Yao, 2019. "Statistical model for earthquake economic loss estimation using GDP and DPI: a case study from Iran," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(2), pages 583-598, March.
    11. Michael Berlemann & Daniela Wenzel, 2016. "Hurricanes, Economic Growth and Transmission Channels - Empirical Evidence for Developed and Underdeveloped Countries," CESifo Working Paper Series 6041, CESifo.

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    More about this item

    Keywords

    natural disasters; floods; growth; saving behavior; difference-in-differences approach;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid

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