Do Natural Disasters Affect Household Saving? Evidence From the August 2002 Flood in Germany

2025/11/06 by Michael Berlemann, Erik Haustein, Max Friedrich Steinhardt +1 · 1 voice
Agricultural and Biological Sciences · Environmental Science · Social Sciences · #Agricultural risk and resilience #Flood Risk Assessment and Management #Disaster Management and Resilience

paper · pdf · doi:10.1007/s41885-025-00182-8

Abstract

Abstract Recently, there is a growing interest in understanding how individuals adapt to changing climate conditions and climate-induced extreme weather events. An underexplored question is whether and how climate-related natural hazards affect household saving behavior. For this purpose, we exploit a natural experiment stemming from the European Flood of August 2002. Combining micro data with geo-coded flood maps allows us to analyze the causal impact of flood exposure on household savings within a difference-in-differences setting. We find that flood exposure depresses household saving behavior in the medium run. A likely explanation is moral hazard induced by massive government support for affected households.

Citations

• Prospect Theory: An Analysis of Decision under Risk

Discussions

• 🎉 Our study “Do Natural Disasters Affect Household Saving?” found a great home in Economics of Disasters and Climate Change! After Germany’s 2002 flood, affected households saved less — generous disa [bsky, 25 points, 1 comments]

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