Do Natural Disasters Influence Long-Term Savings?: Assessing the Impact of the 2008 Sichuan Earthquake on Household Saving Rates Using Synthetic Control

By employing the synthetic control method, the authors examine the short- and long-term effects of the 2008 Sichuan earthquake on saving behaviour. The results indicate that, in the short run, the earthquake caused drastic declines in household saving rates—from 24 per cent to seven per cent and from 23 per cent to 21 per cent for rural and urban populations, respectively. However, household saving rates recovered to the baseline shortly after the shock, and the outcome exactly matches the counterfactual counterparts in the following period. The estimates imply that, at the aggregate level, the earthquake has had no discernible long-run impact on the saving propensity of the affected population.