Earthquake and household energy consumption - Evidence from the Wenchuan earthquake in China

In this article, we focus on how household consumption responded to the Wenchuan earthquake in China. Based on the data from 2007, 2008 and 2009 from the China Urban Household Survey, we adopt the difference-indifference model (DID) and find that the Wenchuan earthquake significantly restrained household consumption. First, the total consumption, energy consumption and energy consumption ratio were suppressed by the Wenchuan earthquake. The negative impact was mainly driven by the living like there's no tomorrow effect, and the consumption decisions of the affected households were not always identical. A possible mechanism is salience theory. Second, both the energy consumption ratio and fuel consumption ratio were dramatically reduced by the Wenchuan earthquake. Third, transfer payments helped households mitigate adverse impacts. In addition, households with low education, low income and low social networks were the most strongly affected by the Wenchuan earthquake.

Automated summary

This article focuses on the impact of the Wenchuan earthquake on household consumption in China. Using data from the China Urban Household Survey from 2007-2009 and the difference-indifference model, it is found that the earthquake significantly restrained household consumption, especially in terms of energy and fuel consumption. Transfer payments helped mitigate the adverse effects. The most strongly affected were households with low education, low income, and weak social networks.