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Humboldt-Universität zu Berlin - Lebenswissenschaftliche Fakultät - Quarterly Journal of International Agriculture

Quarterly Journal of International Agriculture No. 2/11


Natural Shocks and Risk Behavior:
Experimental Evidence from Cameroon

Roland Azibo Balgah
Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) Halle (Saale), Germany,

Gertrud Buchenrieder
Martin Luther University Halle-Wittenberg, Germany


Abstract

Increasing occurrence of devastating natural shocks has stimulated research interest in the economics of natural disasters. Much of this scholarly work concentrates on effects of shocks on poverty, risk and vulnerability, and very little on understanding the effects of natural shocks on risk behavior. Referring to a 24 year-old disaster, we use unique survey data and experiment results from two disaster affected communities in rural Cameroon to test two hypotheses: (1) Natural shocks affect long term risk behavior; and (2) self-relocation into risk-prone areas is an explicit demonstration of risk taking. The results reveal differentiated risk behavior in self-relocated and state-resettled households, with the former taking higher risks compared to resettled house¬holds. Experiments strongly support trends observed in the empirical study, but captured cognitive behavior better than the survey. Results support previous evidence on applying experiments in understanding cognitive risk behavior and confirm our hypotheses.

Keywords: shocks, risk behavior, experiment, Cameroon

JEL: C93, D81, Q12, Q28, Q54

Vol. 50 (2011), No. 2: 155-173