Valuing Flood Disasters Using the Life Satisfaction Approach
نویسندگان
چکیده
This paper argues that life satisfaction data can be used to value natural disasters. We discuss the strengths of this approach, compare it to traditional methods and apply it to estimate and monetize utility losses caused by floods in 17 OECD countries between 1973 and 2004. Using combined cross-section and time-series data, we find a negative impact of floods on life satisfaction that is sizeable, robust and significant. The estimates are comparable to price discounts found in housing markets. In an exploratory analysis, we find that risk transfer mechanisms such as mandatory insurance have large mitigating effects. (97 words) JEL: D61, D81, H40, I31, Q51, Q54
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