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How Do People Cope with Natural Disasters? Evidence from the Great Hanshin‐Awaji (Kobe) Earthquake in 1995
Author(s) -
SAWADA YASUYUKI,
SHIMIZUTANI SATOSHI
Publication year - 2008
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2008.00122.x
Subject(s) - natural disaster , constraint (computer aided design) , coping (psychology) , consumption (sociology) , economics , forensic engineering , demographic economics , geography , psychology , engineering , sociology , social science , psychiatry , mechanical engineering , meteorology
This paper investigates the coping strategies employed by victims of the Great Hanshin‐Awaji (Kobe) earthquake in 1995. Using a unique household data set, we show that households that held a large amount of collateralizable assets before the catastrophe and were free from a binding borrowing constraint were able to maintain their consumption levels by borrowing. In contrast, households subject to a binding borrowing constraint before the disaster were unable to borrow to cope with the losses inflicted by the earthquake. On the other hand, both types of households relied on private transfers, depending on the extent of the damage.