mechanism through which risk aversion manifests, one plausible conclusion is the increased perception of background risk.

In Vietnam, (Reynaud and Nguyen, 2012) find experience of floods to have a significant positive effect on demand for insurance, which may reflect higher levels of risk-aversion. Also in Vietnam, (Dang, 2012), combining historical and contemporary survey data in Vietnam, finds that individuals living in villages that frequently experience a disaster and those who recently experienced a shock show higher levels of riskaversion. (Abreha, 2007) finds similar results of drought experience and risk-aversion among farmers in Ethiopia.

However, some studies find the opposite – that exposure to natural disasters can make people more riskloving. In Louisiana, Eckel et al. (2009) conducted an experimental test on individuals exposed to Hurricane Katrina in September 2005, a month after the storm. He finds evacuees to be more risk-loving (less risk averse) after the storm, although this effect is not observed 10 months later. Various other analyses provide evidence on such change in perception: (Page et al., 2014) provide evidence of a similar risk-loving effect with households who suffered loss as a result of the 2011 Australian floods in Brisbane;<sup>13</sup> (Hanaoka et al., 2015) exhibits similar findings using panel data from Japanese households after the 2011 earthquake and tsunami, but only for men, who gamble and drink more after the event.<sup>14</sup> Andrabi and Das (2010) find the 2005 earthquake in Pakistan increased risk aversion; Said et al. (2014) find a similar result for the 2010 flood in Pakistan.

But not all studies confirm the finding that risk preferences change. (Bchir and Willinger, 2013), in a field experiment of lahars risk in Peru, find no significant difference of risk aversion between exposed and nonexposed households. (Becchetti et al., 2012) finds a similar result of no significant difference in a sample of 380 Sri Lankan microfinance borrowers. In addition, preliminary findings from an experimental game in Cambodia’s Battambang province actual finds experience with a natural disaster has a positive and significant impact on risk behavior of participants (Fiala, 2015). The contradiction cannot be easily explained by different context, since studies disagree even in one given location. (Cassar et al., 2015), through risk experiments of 334 subjects from Thai villages affected in different degrees by the 2004 event, find that individuals hit hardest by the disaster exhibit strong risk aversion four and a half years after the disaster (in 2009). (Callen, 2011), finds no evidence that risk preferences were changed in an experiment conducted on a sample of 456 wage workers in July 2007. One possibility is that the impact of background risk is more complex than a simple increase in risk aversion. For instance, (Li et al., 2011) finds that individuals exposed to earthquake and snowfall risk in China cannot simply be described as more riskseeking, but that individuals give more weight to low probabilities after the 2008 China earthquake and snowfall event.

> 13 One limitation of this study is that relative to the household’s situation at the time of survey, the risk game only presents gain options.

> 14 The authors find evidence that men become more engaged in gambling and drinking if they were more exposed to the Earthquake.

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