RAPID: Decision-Making Involving Risk in the Immediate Aftermath of a Natural Disaster

Regents Of The University Of Michigan - Ann Arbor, Ann Arbor MI

Investigators

Abstract

Exposure to a natural disaster can lead individuals and families to make inefficient decisions, some of which may involve risk. Negative shocks often lead to increases in behaviors that results in bad outcomes that may persist into the long run. However, the mechanisms through which natural disasters affect decision making are not known. This research will use experimental methods to study the effects of a natural disaster on household decision making in the immediate aftermath of the natural disaster. Specifically, the research will investigate the following: (i) what are the human and economic losses due to the disaster, (ii) the effects on health decisions such as medical testing, taking medications, (iii) changes in individual choices that may reinforce or reduce the initial effects, and (iv) how household cope with the disaster. This project's findings can reveal many consequences of natural disasters: disruption of programs to combat epidemics such as HIV/AIDS or measles. Understanding the mechanisms through which natural disasters affect decisions with risky outcomes will help policy makers to craft more effective ways to help reduce the damaging effects of natural disasters. This research project seeks to answer the following questions: (i) how does a natural disaster affect the health and economic outcomes of households in the immediate aftermath? (ii) how do household make decisions about health care immediately after the disaster? (iii) how do changes in individual preferences mediate these effects (will the disaster affect household risk or time preference)? and (iv) what mechanisms do households adopted to cope with the disaster? The researchers will leverage prior randomization at the community and individual levels in an on-going project in the area to identify the causal effects of natural disaster on these outcomes. A major contribution of this research project is the collection of ephemeral data on household preferences and healthy behaviors in the immediate aftermath of the disaster. The presence of the research team in the disaster area allows the team to collect the appropriate ephemeral data. The results of this research project will provide important data sets to study household behavior in the immediate aftermath of a disaster. The results will also provide important inputs into policies to help victims of natural disasters in the US and around the world. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.