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Earthquake Risk Information and Risk Aversive Behavior: Evidence from a Survey of Residents in Tokyo Metropolitan Area

Author

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  • Yasuo Kawawaki

    (Visiting Professor, Osaka School of International Public Policy (OSIPP))

Abstract

This paper analyzes the relationship between provision of earthquake risk information and residents' willingness to pay (WTP) for disaster risk reduction by the Contingent Valuation Method (CVM), using questionnaire survey data on the purchase of earthquake insurance in the Tokyo Metropolitan Area, Japan. Degree of disaster risk aversion and subjective probability of loss are estimated as parameters of expected utility function in a discrete choice model. The results suggest that when more precise and specific earthquake risk information is provided, residents of vulnerable houses are willing to pay more for disaster risk reduction, with larger subjective probability of loss, while those in safe houses are willing to pay slightly less, with a larger degree of risk aversion.

Suggested Citation

  • Yasuo Kawawaki, 2012. "Earthquake Risk Information and Risk Aversive Behavior: Evidence from a Survey of Residents in Tokyo Metropolitan Area," OSIPP Discussion Paper 12E008, Osaka School of International Public Policy, Osaka University.
    • Handle: RePEc:osp:wpaper:12e008
    as

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    File URL: http://www.osipp.osaka-u.ac.jp/archives/DP/2012/DP2012E008.pdf
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    References listed on IDEAS

    as
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    3. Brookshire, David S & Thayer. Mark A & Tschirhart, John & Schulze, William D, 1985. "A Test of the Expected Utility Model: Evidence from Earthquake Risks," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 369-389, April.
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    6. Philip Ganderton & David Brookshire & Michael McKee & Steve Stewart & Hale Thurston, 2000. "Buying Insurance for Disaster-Type Risks: Experimental Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 271-289, May.
    7. Timothy L. McDaniels & Lawrence J. Axelrod & Nigel S. Cavanagh & Paul Slovic, 1997. "Perception of Ecological Risk to Water Environments," Risk Analysis, John Wiley & Sons, vol. 17(3), pages 341-352, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    CVM; WTP; Earthquake Insurance; Risk Aversion; Subjective Probability of Loss;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

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