The Great East Japan Earthquake and its Behavioral Implications:

Makoto Saito, Hitotsubashi University

How severe was radiation contamination?

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How severe?

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How were radioactive substances spread?

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Time series of contamination level

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Those who were affected

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The 2005 Census30km circle Prefectural

total142752 2091319 6.83%20789 307294 6.77%34040 474860 7.17%4583 64990 7.05%

30kmcircle/ Prefect

ural total

Unemployment

Total populationPopulation aged 14 or youngerPopulation aged 65 or older

Economic damages

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20km circle 537,832,801 530,519,41130km circle 826,501,921 827,486,084

20km circle 7.3% 7.2%30km circle 11.2% 11.2%

Nuclear- accident- induceddamages in percent

Nuclear- accident- induceddamages in 1,000 yen

Based on # ofestablshments

Based on # ofworkers

System of Regional AccountsBased on # ofestablshments

Based on # ofworkers

System of Regional Accounts

Economic damages

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20km circle 899,89130km circle 1,682,792

20km circle 0.5%30km circle 0.9%

Nuclear- accident- induceddamages in 1,000 yen

Nuclear- accident- induceddamages in percent

Agricultureand Forestry

Census

Agricultureand Forestry

Census

Consumers’ reaction to radiation contamination

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A questionnaire survey on consumers’ responses to radiation-contaminated food

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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?

Those who purchase, discount, or never purchase

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Case 1: apurchase

without anydiscounting

Case 2: apurchase withdiscounting

Case 3: nopurchase at any

pricetotal

10 Bq 1,189 2,934 3,477 7,600(15.6%) (38.6%) (45.8%)

50 Bq 892 2,137 4,571 7,600(11.7%) (28.1%) (60.1%)

100 Bq 670 1,516 5,414 7,600(8.8%) (19.9%) (71.2%)

200 Bq 428 1,000 6,172 7,600(5.6%) (13.2%) (81.2%)

Table 1: The share of the respondents classified according to thethree cases

A pattern in disounting

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050

010

0015

00Fr

eque

ncy

0 50 100 15010 Bq

050

010

0015

00Fr

eque

ncy

0 50 100 15050 Bq

050

010

0015

00Fr

eque

ncy

0 50 100 150100 Bq

050

010

0015

00Fr

eque

ncy

0 50 100 150200 Bq

Surprising results!

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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?

Some interpretations by the prospect theory

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Application of the prospect theory as a behavioral hypothesis

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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.

Objective risk

Subjective risk45 degree line

A coincidence between objective and subjective risks

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Overestimation of small risks

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Underestimation of a tiny reduction in risk

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Positive assessment of avoiding risk completely, or zero risk

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Hesitation to move from status quo in any direction

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Coming back to the questionnaire survey…

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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

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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.

On the importance of relativity and time-consistency in risk assessment

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A relative risk assessment: Risk-risk analysis

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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

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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

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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.