Well-being effects of a major negative externality: The case of Fukushima

Based on a quasi-experimental difference-in-differences approach, we use panel data for 5979 individuals interviewed in Japan before and after the tsunami and nuclear accident at Fukushima to analyze the effects of the combined disaster on people's subjective well-being. To conduct our analysis, we use Geographical Information Systems to merge the subjective well-being data with information on respondents’ distance from the Fukushima Dai-ichi nuclear power plant, their proximity to nuclear power stations in general, and the spatial distribution of radioactive fallout after the accident. Our main findings are as follows: (1) After the disaster, people living in a place affected by the tsunami or close to the Fukushima Dai-ichi power plant experienced a drop in life happiness, while the effects declined with distance to the place of the disaster. (2) No change in subjective well-being is detectable in people living close to nuclear facilities in general. (3) In contrast to happiness with life after the disaster, no effect on people's happiness with their entire life can be found among those affected by the disaster. (4) The drop in life happiness in municipalities affected by the tsunami is equivalent to 72% of annual income and reaches 240% for those living in close distance to the Fukushima Dai-ichi power plant (≤150 km).