Natural disasters have a profound impact on various facets of society, including social dynamics, health outcomes, and economic stability. As concerns over increasing natural disaster risks intensify, there is a corresponding rise in research examining the effects of these events on life satisfaction. However, there remains a significant gap in strong causal evidence regarding the indirect and direct influences of natural disasters on various domains of life satisfaction. This underscores the need for more robust studies that can provide a deeper understanding of these complex relationships.
This study pioneers a causal analysis of cyclones’ impacts on Australians’ life satisfaction, using local cyclones as natural experiments. Analysing over two decades of data, individual fixed-effects models reveal that cyclones, particularly category 5 (highest severity) cyclones in close proximity to residences, significantly reduce overall life satisfaction and specific domains like community, personal safety, and health satisfaction. Notably, these cyclones have a lasting impact on community and personal safety satisfaction. Our findings withstand rigorous sensitivity assessments, including a falsification test demonstrating no impact of future cyclones on current life satisfaction. Moreover, extensive heterogeneous analysis uncovers significant variations in cyclone impact based on life satisfaction domains and individual, household, and regional characteristics. Additionally, this study shows that cyclone-induced home damage, especially from the most severe cyclones, significantly diminishes the aforementioned life satisfaction outcomes, but to a much greater magnitude.
The results presented in this study have important methodological and policy implications. Methodologically, our findings highlight the importance of accounting for individual time-invariant unobservable characteristics when quantifying the effects of cyclones on life satisfaction. Failure to do so may lead to biased estimates of the true impacts. Similarly, addressing the endogeneity of self-reported natural disaster-related damage is crucial to avoid biased estimates of its true impact on life satisfaction. From a policy perspective, our novel finding of negative and substantial impacts of cyclones on life satisfaction provides valuable information for crafting effective policies and interventions aimed at supporting affected populations, especially those disproportionately negatively affected by cyclones.