Demographic factors, behavioural characteristics and financial literacy

What is it about?

We investigate the demographic factors, behavioural characteristics and financial literacy to recovery from the financial losses inflicted by the Saturday bushfire. Behavioural characteristics (such as overconfidence, self-serving and loss aversion biases) in conjunction with bushfire survivors’ knowledge of financial indicators are used to determine recovery time.

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Why is it important?

We contribute to the disaster literature (bushfires and financial impairment more specifically) in terms of behavioural and financial factors in survivors’ recovery. To gain a better understanding of the behavioural and financial factors, we examine the effects of a major Victorian bushfire, the Saturday bushfire, which on 7 February 2009 resulted in 173 deaths and caused significant damage to livestock and other property. Basing our research instruments on the existing bushfire literature relating to behavioural biases and financial literacy, we use a survey approach to collect the data used to identify the factors that affect a survivor’s recovery from bushfires. Our study contributes to the emerging environmental finance literature and highlights the policy implications in regard to the importance of financial planning, financial literacy, insurance, insurance literacy, and superannuation.

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