The distributional effects of natural disasters on the Big Five personality traits

In the context of climate change and the well-established links between personality traits and life outcomes, this paper presents a novel investigation into the causal effects of natural disaster-induced housing damage on the Big Five personality traits. Using a time-varying, plausibly exogenous measure of local cyclone exposure as an instrument within an individual fixed effects instrumental variable framework, we find that weather-related home damage significantly reduces Conscientiousness and Emotional Stability, while increasing Openness to Experience. These effects are highly heterogeneous: significant impacts emerge only in quantile regression models, with individuals at the lower end of the Conscientiousness and Emotional Stability distributions more adversely affected, and those at the upper end of the Openness distribution exhibiting greater increases. Furthermore, our findings suggest that weather-related home damage may indirectly reduce earnings by altering personality traits in ways associated with lower income-effects that are not only statistically significant but also substantial in magnitude and economically meaningful. These personality changes may correspond to income losses of up to 5%, with socioeconomically disadvantaged individuals being most severely affected.