Why People Underprepare for Natural Hazard? (2)


Behavioral economics provides some clues. 

In fact, behavioral science has contributed much to the understanding of decision-making in the last few decades. It has revealed that our perceptions, preferences, choices and behaviors are often influenced by heuristics and cognitive biases. Research on the psychology of natural hazards and decision biases influencing hazard mitigation has been driven by Howard Kunreuther, Robert Meyer, Erwann Michel-Kerjan at the Wharton Center for Risk Management and Decision Processes at the University of Pennsylvania. Their analysis of the decision-making during natural disasters – mostly in the US context – has found that key behavioral biases and heuristics, play a great role in people’ reluctance to invest in mitigation measures. In their chapter (Kunreuther, et al., 2013) identify eight psychological biases and situational barriers that shape such decisions and hence limit people’s willingness to invest in hazard mitigation measures.

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To better understand why residents often act against their own interest and underprepare for natural disaster, let’s attempt to address the following questions: (1) Do residents in hazard-prone areas feel at risk? (2) Are they good forecasters? (3) Will they procrastinate?

(1) Do residents in hazard-prone areas feel at risk?

Well, the residents’ perception and response to future disasters is greatly influenced by the way they construe those events over time. Residents’ safety (and hence their need for risk prevention) is often recognized as a desirable goal (Higher-level construal). However, is safety worthy of investment?  Crudely, yes it is. Nonetheless, such investment becomes unfeasible as soon as hazard mitigation is framed as a near-future (lower-level construal) undertaking (Liberman, 2003). In fact, for many residents (landlords and tenants), installing mitigation measures might not be affordable in the short-run. They tend to overweight upfront mitigation costs and value their outcomes differently over time.

Are they good forecasters? (3) Will they procrastinate? (To be continued)

Kunreuther, H., Meyer, R., & Michel-Kerjan. E. (2013). Overcoming Decision Biases to Reduce Losses from Natural Catastrophes. In E. Shafir (Ed.), The Behavioral Foundations of Public Policy (pp. 399-413). New Jersey, NJ. Princeton University Press.
Trope, Y. & Liberman, N. (2003). Temporal Construal. Psychological Review, 110 (3), 403- 421.

Why People Underprepare for Natural Hazard?

Natural hazards are major adverse events resulting from natural processes. Natural disaster can cause loss of life or property damage, the severity of which depends on the affected population’s resilience and their ability to recover. They are fundamentally unpredictable and low probability events.

It has been widely recognized that the human and economic losses from natural disasters have been increasing drastically over the last three decades. These catastrophic losses are mostly driven by the population density and concentration of economic assets in disaster-prone areas (tropical coasts and river deltas, near forests and along earthquake fault lines). The US coast represents a microcosm of the world urbanization exposed to natural hazards.

In fact, its East Coast, from New York to Texas through Florida, hosted more than 36% of the total population in (US Census, 2010), and nearly $8.3 trillion of insured and hurricane-prone assets (Kunreuther and Michel-Kerjan, 2009). Along with Robert Meyer, they were intrigued by the mismatch between the increasing investment in hazard prone areas such as the waterfront development on the coasts and the under-investment in risk-reduction and mitigation measures (Kunreuther, 2013). They related people’s failure to mitigate against natural hazards to some fundamental decision biases that can’t be explained by the mainstream micro-economics theory, mostly accounting for maximizing utilities with no attention to people’s perception and behavior toward risks. In addition, they associated these behavioral biases, along with the government’s post-disaster relief, to what they called a “natural disaster syndrome”.

What are the features of the “natural disaster syndrome”? What are these cognitive decision biases? What drivers hinder residents’ investment in hazard’s way? (To be continued)

NOTE: The photos are drawn from http://www.hurricanekatrina.com