IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/16266.html
   My bibliography  Save this paper

The Impact of Climate Change on Risk Aversion and Mitigation Behavior: Evidence from Germany

Author

Listed:
  • Avdeenko, Alexandra
  • Eryilmaz, Onur

Abstract

This paper investigates whether the 2013 floods in Germany affected risk preferences and mitigation behavior, using a representative, longitudinal data set. Exploiting the circumstance that this weather phenomenon was unanticipated, we provide robust evidence that flood exposure had a depressing impact on individual willingness to take risks. The effect size corresponds to a 4.85 percent reduction from the pre-treatment mean, varies between men and women, and is detectable up to five years after the shock. We show that this change is mediated by changes in well-being. Moreover, we discuss whether these changes in risk aversion may eventually reduce the costly moral hazard problem in climate change mitigation policies. In particular, we document that selection on risk aversion leads to a higher uptake in life insurances in high-risk areas.

Suggested Citation

  • Avdeenko, Alexandra & Eryilmaz, Onur, 2021. "The Impact of Climate Change on Risk Aversion and Mitigation Behavior: Evidence from Germany," CEPR Discussion Papers 16266, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16266
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP16266
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Microeconomic behavior; Risk aversion; Life insurance; Natural disasters;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:16266. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.