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Effects of Natural Shocks on Risk Behavior. Experimental Evidence from Cameroon

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  • Balgah, Roland Azibo
  • Buchenrieder, Gertrud

Abstract

Increasing occurrence of devastating natural shocks has stimulated research interest in the economics of natural disasters. Much of this scholarly work concentrates on effects of shocks on poverty, risk and vulnerability, and very little on understanding the effects of natural shocks on risk behavior. Referring to a 25 year-old disaster, we use unique survey data and experiment results from two disaster affected communities in rural Cameroon to test two hypotheses: (1) Natural shocks affect long term risk behavior; and (2) self-relocation into risk-prone areas is an explicit demonstration of risk taking. The results reveal differentiated risk behavior in self-relocated and state-resettled households, with the former taking higher risks compared to resettled households. Experiments strongly support trends observed in the empirical study, but captured cognitive behavior better than the survey. Results support previous evidence on applying experiments in understanding cognitive risk behavior and confirm our hypotheses.

Suggested Citation

  • Balgah, Roland Azibo & Buchenrieder, Gertrud, 2011. "Effects of Natural Shocks on Risk Behavior. Experimental Evidence from Cameroon," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114215, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae11:114215
    DOI: 10.22004/ag.econ.114215
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    3. Syster C. Maart-Noelck & Oliver Musshoff, 2014. "Measuring the risk attitude of decision-makers: are there differences between groups of methods and persons?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), pages 336-352, July.

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