Risk perception of earthquakes: Modeling conception of willingness to pay and prospect theory

Abstract

Natural disasters have greatly threatened people's lives and properties. In recent years, disaster management has become a key issue for the sustainable development of a society. In this regard, understanding how people perceive disasters is needed to formulate better disaster management strategies and enhance the resilience of the society. This research seeks to study risk perception and relevant attitudes, which are the fundamental factors of human behavior under the threat of disaster impact. A stated preference survey is conducted to investigate people's willingness to pay for earthquake risk reduction, where the effect of information is also the concern and incorporated in survey design. Thereupon, a multiple-bounded dichotomous choice model and an ordered probit model are estimated to quantify risk attitudes toward earthquakes as the monetary value. Results suggest that factors, such as higher socioeconomic status, more family members, and the residence aged above 40 years old, have positive effects on risk perception. In addition, presenting previous earthquake disaster damage information may increase individuals' risk perception. The prospect theory is employed in the study to establish a theoretical model to capture people's risk-seeking and/or risk-averse behavior, thereby more sophisticatedly reflecting the behavioral realism related to disaster preparedness. Based on the improved understanding of risk perception and relevant attitudes, the associated authorities may be able to develop solid resilience-enhancement programs and more effectively strengthen disaster response efficiency, thereby minimizing the damages and injuries caused by earthquakes.