Séminaire GREDEG : Marc WILLINGER (University of Montpellier)

Title: Living with Risk: How Chronic and Acute Disasters Shape Economic and Social Preferences

Abstract: We examine how living under chronic and acute environmental risks influences risk preferences and social behavior. Our lab-in-the-field experiment was conducted near Mount Semeru in East Java, Indonesia, comparing villagers in high-risk zones exposed to volcanic eruptions and lahars with residents from nearby lower-risk areas. During the data collection period, a major eruption in December 2021 provided a natural experiment to study behavioral responses to both background risk and an acute disaster realization. Participants engaged in incentivized economic games measuring risk attitudes, altruism, trust, reciprocity, and cooperation, complemented by survey data.
We find that chronic exposure to environmental risk increases risk aversion but has no significant effect on social preferences. In contrast, the eruption significantly boosted prosocial behaviors across multiple domains, though its effect on risk attitudes became negligible once social preferences were accounted for. Our results highlight the complex and differentiated ways in which long-term exposure and salient shocks shape individual decision-making under risk.

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