Risky Coping

This paper examines whether, in an effort to cope with adverse shocks, poor people with limited coping capacity take large risks (risky coping). About two years after a tropical cyclone in Fiji, many people decided to apply for dangerous international jobs involving casualty risk through a recruitment agency that later turned out to be a fraudster. The analysis reveals that victims with damaged housing are more likely to undertake this risky investment strategy than non-victims. I show evidence that disaster victims use this strategy for risk coping, but not because they have become less risk averse.