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Direct Shock Experience vs. Tangential Shock Exposure: Indirect Effects of Flood Shocks on Well-Being and Preferences
[Well-Being Effects of Extreme Weather Events in the US]

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  • Wiebke Stein
  • Reinhard A Weisser

Abstract

With extreme weather events on the rise, the question of how witnessing adverse weather events may affect individuals’ perception, and consequently their subjective well-being, gains in relevance. To identify events that have been witnessed, i.e., tangential exposure to a weather shock, satellite-based data on flooding is linked to an extensive household panel survey from rural Southeast Asia. Contrasting direct shock experience with tangential shock exposure, we find that mere proximity to a potentially adverse shock, without reporting any actual direct shock experience, could be sufficient to reduce subjective well-being. This effect is not only restricted to the present but can also impinge on expected future well-being dynamics. Eventually, such a persistent effect from witnessing a weather shock may have further politico-economic repercussions, for instance, by altering support for redistribution policies.

Suggested Citation

  • Wiebke Stein & Reinhard A Weisser, 2022. "Direct Shock Experience vs. Tangential Shock Exposure: Indirect Effects of Flood Shocks on Well-Being and Preferences [Well-Being Effects of Extreme Weather Events in the US]," The World Bank Economic Review, World Bank, vol. 36(4), pages 909-933.
    • Handle: RePEc:oup:wbecrv:v:36:y:2022:i:4:p:909-933.
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    File URL: http://hdl.handle.net/10.1093/wber/lhac012
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    References listed on IDEAS

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