TY - JOUR
T1 - Earthquakes and the quality of life in Japan
AU - Naoi, Michio
AU - Sumita, Kazuto
AU - Seko, Miki
N1 - Funding Information:
We are grateful to the National Research Institute for Earth Science and Disaster Prevention (NIED) for generously providing us with the data on earthquake hazard information. Previous versions of this paper were presented at the 14th Annual Conference of the European Real Estate Society, the 2007 Japan Economic Association Spring Annual Meeting at Osaka Gakuin University, the 8th Macroeconomics conference at Keio University, the Urban Economics Workshop at the University of Tokyo, and the Economics Seminar at Nagoya University. The authors would like to thank Komei Sasaki, Fukuju Yamazaki, the editors and the anonymous referees for their valuable comments and suggestions. The first author (Michio Naoi) acknowledges a Grant-in-Aid (#19730183) for Young Scientists from the Ministry of Education, Culture, Sports, Science and Technology. Also, the second and third authors (Kazuto Sumita and Miki Seko) acknowledge a Grant-in-Aid (#19530157) for Scientific Research (C) from the Ministry of Education Culture, Sports, Science and Technology.
PY - 2007/12
Y1 - 2007/12
N2 - Japan is famous for its earthquakes. How do households and firms respond to this potentially devastating risk? How does earthquake risk affect housing costs and wages? To answer these questions, we construct a Quality of Life Index (QOLI) and estimate the social cost of earthquake risk among cities/counties in Japan. The regional QOLI is obtained through estimating the hedonic wage and housing rent regressions using household longitudinal data covering all Japan. From the estimated results, we find that earthquake risk has a significant impact on the overall quality of life in Japanese prefectures, and that there are large city/county differences in terms of the social cost of earthquake risk. Finally, we argue that the large regional variation in the social cost of earthquakes arises from earthquake insurance market imperfections - crude and rough geographical risk rating - and propose a possible remedy for enhancing earthquake insurance risk assessment.
AB - Japan is famous for its earthquakes. How do households and firms respond to this potentially devastating risk? How does earthquake risk affect housing costs and wages? To answer these questions, we construct a Quality of Life Index (QOLI) and estimate the social cost of earthquake risk among cities/counties in Japan. The regional QOLI is obtained through estimating the hedonic wage and housing rent regressions using household longitudinal data covering all Japan. From the estimated results, we find that earthquake risk has a significant impact on the overall quality of life in Japanese prefectures, and that there are large city/county differences in terms of the social cost of earthquake risk. Finally, we argue that the large regional variation in the social cost of earthquakes arises from earthquake insurance market imperfections - crude and rough geographical risk rating - and propose a possible remedy for enhancing earthquake insurance risk assessment.
KW - Earthquake insurance
KW - Earthquake risk
KW - Quality of life
KW - Social costs of earthquake
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U2 - 10.1080/09599910801916212
DO - 10.1080/09599910801916212
M3 - Article
AN - SCOPUS:61349088163
SN - 0959-9916
VL - 24
SP - 313
EP - 334
JO - Journal of Property Research
JF - Journal of Property Research
IS - 4
ER -
