Measuring the economic impact of a natural disaster
Contributor(s): Professor Janet Hunter
Released on 27 October 2009.
On 1 September 1923, an earthquake measuring 8.3 on the Richter scale struck the main Japanese island of Honshū. What wasn't immediately destroyed in the 4 – 10 minutes during which the ground shook was consumed by fires which swept through the largely wooden buildings of Tokyo and the port city of Yokohama – Japan's central import hub.
In this short film Professor Janet Hunter, of the Department of Economic History, looks at how the Japanese economy reacted to this disaster. Despite the massive devastation and loss of life – as many as 140,000 died – one extraordinary feature is how quickly the Japanese economy recovered. Within two to three years, most of the large-scale indicators such as gross domestic product, had reverted to trend. Indeed by 1926 it was, in many respects, as if the earthquake had never occurred.
According to Professor Hunter's research, patterns are emerging that permit insights into the psychology of markets. These suggest that even short-term profit-seeking, although seemingly callous and opportunistic, ultimately plays a vital role in assuring swift recovery.
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