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The Great East Japan Earthquake and its Behavioral Implications:. Makoto Saito, Hitotsubashi University. How severe was radiation contamination?. How severe?. How were radioactive substances spread?. Time series of contamination level. Those who were affected. Economic damages.

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the great east japan earthquake and its behavioral implications

The Great East Japan Earthquake and its Behavioral Implications:

Makoto Saito, Hitotsubashi University

a questionnaire survey on consumers responses to radiation contaminated food
A questionnaire survey on consumers’ responses to radiation-contaminated food
  • Inquiring about a response to radiation-contaminated milk for
    • 7,600 adults living in the Tokyo metropolitan area in August, 2011
  • Assume that milk without any contamination is traded at 200 yen per liter. Then, what if it is contaminated?
    • Still purchases at 200 yen per liter,
    • Purchases, but discounts it below 200 yen per liter, or
    • Never purchases.
  • The government required contamination level to be below 200Bq/liter:
    • 10 Bq/liter?
    • 50 Bq/liter?
    • 100 Bq/liter?
    • 200 Bq/kiter?
surprising results
Surprising results!
  • More than a half of the respondents never purchased contaminated milk even if it was only slightly contaminated.
  • Even those who discounted contaminated milk never discounted it heavily.
    • A choice may be between discounting slightly and not purchasing.
  • However, a careful look at the results leads us to:
    • Yong women with small children refused to purchase it.
    • A fraction of the respondents still chose to purchase it with or without discounting.
    • Why do we observe such heterogeneity?
application of the prospect theory as a behavioral hypothesis
Application of the prospect theory as a behavioral hypothesis
  • A consumer may over- or under-estimate a probability that an unfavorable event takes places.
  • Such a bias in risk assessments may trigger a seemingly irrational behavior.
a coincidence between objective and subjective risks
A coincidence between objective and subjective risks

Subjective risk

45degree line

Objective risk

coming back to the questionnaire survey
Coming back to the questionnaire survey…
  • Avoiding radiation-contaminated milk results in only a slight reduction in cancer risk, or a death probability by death.
    • Conversely, taking radiation-contaminated milk leads to only a slight increase in cancer risk
  • Thus, a response to radiation to radiation-contaminated milk may differ between:
    • Those who perceive own cancer risk to be quite low may be rather averse to even tiny risk, and prefer for zero risk.
    • Those who perceive own cancer risk to be relatively high may be insensitive to a tiny increase in cancer risk.
  • The questionnaire survey asked the respondents about own lifetime cancer risk:
    • No cancer risk: 8.3%
    • Lower than the national average of lifetime cancer risk (30%): 18.3%
    • Close to the national average: 36.8%
    • Above the national average: 16.3%
    • Unable to judge: 19.9%
    • No answer:0.4%
estimation results and their implications
Estimation results and their implications
  • Who are extremely averse to radiation contamination risk?
    • Those who perceive own cancer risk to be rather low.
      • Evidence for strong preference for zero risk
    • Those who are young with small children.
  • Who are less averse to radiation contamination risk?
    • Those who perceive own cancer risk to be relatively high, including the old, heavy smokers, and chronic drinkers.
  • Policy should take into consideration heterogeneous responses to radiation-contaminated milk.
a relative risk assessment risk risk analysis
A relative risk assessment: Risk-risk analysis
  • Not only radiation contamination, but also other factors are responsible for cancer risk.
  • Cost effectiveness in reduction of a unit of cancer risk differs substantially among different factors responsible for cancer risk.
    • Large-scale radiation cleanup may not be cost-effective.
  • A reduction in a particular risk may result in an increase in another type of risk.
time consistency in risk assessment
Time-consistency in risk assessment
  • Time-consistency between ex-ante and ex-post risk assessment
    • Prior to an unfavorable event, a safety standard tends to be extremely conservative, but it is often relaxed afterwards.
    • Ordinary citizens may understand that a safety standard is relaxed arbitrarily at the sacrifice of health and safety.
  • May be better to set a safety standard to be not extremely conservative, but reasonable from the beginning, and keep it even after unfavorable events.
    • Allowing for heterogeneous responses among consumers beyond a safety standard, which is set reasonably.
    • Respecting differences in judgments and decisions by each other.
conclusions
Conclusions
  • Consider possible catastrophic cases in a reasonable manner even during normal periods.
  • Understand on-going situations in an objective manner during crisis periods with due consideration for biases in recognition.
  • Making reasonable judgments:
    • Compare a particular risk with possible risks.
    • Keep consistency in assessments between before a crisis and after.