Trust, risk, and gender: Evidence from the Black Saturday Fires in Victoria, Australia

Abstract

We investigate whether individuals’ preferences for trust and risk change after being exposed to a natural disaster, specifically, the 2009 Black Saturday Fires. Taking advantage of longitudinal data on a large nationally representative sample of Australians, we find that men who experienced greater intensities of the Fires become less trusting, while women living in those same locations become more risk averse. Furthermore, we find that these effects on men’s trust and women’s risk aversion are robust to several alternative specifications as well as different measures of the key variables and controls. Finally, we find supportive evidence that men are still less trusting at least for two to three years following the Fires, while women remain more risk averse even four to five years after the event. Overall, these findings are consistent with the idea that people’s preferences are endogenous and can be fundamentally and enduringly altered by a large (temporary) shock, such as a natural disaster.

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