Toshio Fujimi

Estimation of indirect economic loss caused by house destruction in a natural disaster

Designing appropriate post-disaster emergency and recovery housing policies requires accurate estimation of the indirect or “flow” loss generated by the involuntary displacement of households to housing other than their own destroyed homes. We employed the stated choice method to measure residence choice following a hypothetical disaster in a procedure developed to estimate flow loss due to house destruction. This method was applied to households in the city of Nagaoka in Niigata Prefecture to estimate flow loss for a range of residence types and residence attributes following relocation. The results revealed that the relocation residence type itself (such as a shelter, temporary dwelling, rental housing, or one’s own home) had a substantial effect on residence choice. Regarding residence attributes, residential expenses such as rent, housing loans, and spaciousness had a significant effect on residence choice. Moreover, we found that respondents placed a very high value on living in their own home compared with other residence types, indicating that subsidizing the prompt repair and rebuilding of private homes is likely to be an effective recovery support policy. In addition, a cost–benefit analysis of our results revealed that rent subsidies are more efficient than the construction of public housing as a means of financially assisting economically constrained households after a disaster.

Factors promoting and impeding precautionary evacuation behaviour

ABSTRACT In July 2012, 23 people in Aso area, Japan died as the result of a landslide; subsequently, 36 people on Izu Island and 74 people in Hiroshima city died after landslides in October 2013 and August 2014, respectively. In all three instances, localized torrential raining occurred in the late evening and all three local governments were hesitant to issue the recommended evacuation warning for the predicted heavy rains in each locality. These unfortunate disasters led the Kumamoto Prefecture to introduce a precautionary evacuation to Aso city and Minamiaso village, but the participation rate of precautionary evacuation has been very low. This study aims to find the factors that promote and impede precautionary evacuation behaviour. We effectuate the covariance structure analysis of preventive evacuation behaviour based on protection motivation theory. We find that the main cause promoting precautionary evacuation behaviour was fear of the natural disaster. The factors impeding precautionary evacuation behaviour were predominantly psychological aspects such as the annoyance and hassle of moving to a shelter or staying at a shelter with others.

Perceived ambiguity about earthquake and house destruction risks

To create effective risk mitigation policies and improve risk communications, it is important to understand how individuals perceive ambiguity about certain risks. A significant number of studies have demonstrated that an individual’s behavior is sensitive to ambiguity. Therefore, this study explores how Japanese homeowners perceive ambiguity about earthquake and house destruction risks by focusing on two research questions: (1) To what degree do people perceive ambiguity? and (2) What are the factors that affect the degree of perceived ambiguity? We administered a survey to 1200 homeowners in Japan. Respondents were asked to state their subjective probabilities and ambiguities about earthquake and house destruction risks. Next, we examined the socioeconomic characteristics affecting their perceived ambiguities by applying a sample selection model. The findings reveal four aspects related to ambiguity. First, some homeowners perceived considerable ambiguity, while the majority observed small degrees of it. Second, on average, homeowners perceived less ambiguity about house destruction risk compared to earthquake risk. Third, socioeconomic characteristics and house attributes had an effect on the perception of ambiguity. Finally, from the perspective of creating policies that mitigate house destruction risks due to earthquakes, seismic diagnoses can help correct subjective risks and reduce the perceived ambiguity regarding them.

An Econometric Model Based on the Maxmin Expected Utility Model: An Application to Earthquake Insurance

This study empirically investigates the influence of ambiguity on consumers’ decision to buy a hypothetical earthquake insurance policy. Using survey data, it identifies effects of specific consumer characteristics on their decision based on the Maxmin Expected Utility (MEU) model. We develop an econometric model consistent with the MEU model derived from axioms. Our study provides three main results: First, respondents’ preferences for the insurance when faced with 1%, 5%, and 10% appraisal risk are generally inconsistent with expected utility theory. Second, respondents demanded more than a 10% reduction in insurance premium as compensation for accepting each tier of appraisal risk. Third, the required discount is greatest among men who had previously purchased earthquake insurance and had experienced earthquake damage to their houses, and the required discount increases with age and education.