Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/320501 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17907
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Climate change is intensifying the frequency and severity of weather-related natural disasters. These events generate significant monetary and non-monetary costs, undermining individual and societal well-being. Using a nationally representative longitudinal dataset from Australia, this study explores the dynamics of well-being before, during, and after natural disasters, with a particular focus on the mediating role of social capital. We employ an event-study design with individual fixed effects to capture both immediate and long-term effects of natural disasters on four critical dimensions of well- being: financial satisfaction, safety satisfaction, mental health, and psychological distress. Our findings reveal that the adverse impacts of natural disasters are profound and long-lasting, persisting in some cases for over 6–7 years, with well-being implications exceeding $1,500,000 in equivalent losses. We find that social capital emerges as a powerful buffer, significantly mitigating declines in safety satisfaction and mental health while reducing psychological distress both during and after disasters.
Subjects: 
mental health
hedonic adaptation
panel fixed-effects
well-being
psychological distress
JEL: 
J21
I31
G50
C23
Document Type: 
Working Paper

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