Delving into the eye of the cyclone to quantify the causal impacts of natural disasters on life satisfaction

The catastrophic effects of natural disasters on social and economic systems are well documented; however, their impacts on individual life satisfaction remain insufficiently understood. This study pioneers a causal analysis of the effects of cyclones on life satisfaction in Australia, leveraging local cyclone exposure as a natural experiment. Drawing on more than two decades of nationally representative panel data, individual fixed-effects models reveal that only the most severe Category 5 events—particularly those occurring in close proximity to residences—significantly reduce overall life satisfaction, as well as satisfaction with community and health. Notably, these severe cyclones exhibit either lasting or delayed adverse effects on satisfaction with employment opportunities, neighbourhood, community, and personal safety. The findings are robust across a range of sensitivity checks, including a falsification test confirming no effect of future cyclones on current life satisfaction, and three randomization tests. Furthermore, these negative impacts are more pronounced among males, younger individuals, and those without prior residential insurance coverage.