The Health Impacts of Earthquakes as Seen Through the Household Expenditure in Japan

Abstract The escalating frequency of natural disasters poses profound challenges to global well-being, with two theories proposed to outline how consumers respond to disruptions. The first theory, termed “precautionary savings,” suggests that consumers tend to increase savings and cut down on expenditures during turbulent times (Paxson, 1992; Udry, 1995), while the second theory, “nothing to lose,” proposes that consumers adopt a more indulgent approach by reducing savings and increase spending on hedonic items (Harris et al., 2002; Filipski, 2023). In this study, we aim to contribute to the understanding of consumer behaviour in the wake of natural disasters, focusing specifically on earthquakes in Japan. Utilizing data from the UCEI (National Centers for Environmental Information) and the Family Income and Expenditure survey (Japan) that corresponds to selected earthquake incidents, we conducted statistical analysis to assess changes in household spending patterns on various medical items and services from the year before and the year by which a specific earthquake took place. We hypothesize that expenditure associated with medical items and services will decrease. In addition, we also used the change in expenditure on alcohol, a classic hedonic item, to further analyze consumer psychology and determine which consumer theory is supported. Our analysis revealed significant shifts in household expenditure. Notably, we observed a discernible decrease in expenditures on medicines (p = 0.004), medical delivery fees (p = 0.038), and alcohol (p = 0.041) coupled with an increase in spending on medical supplies (p = 0.026). These findings align more closely with the “precautionary savings'' theory, suggesting that consumers tend to reallocate their resources and adopt a conservative approach to expenditure in the wake of seismic disruption. We discuss various interpretations of these results, as well as their respective positive and negative health implications. Furthermore, we highlight some limitations inherent in our study and provide directions for future research.