This paper analyzed the effects of weather events on households’ welfare in the Philippines. The estimation strategy was two-pronged. The fixed-effects (FE) estimator was used to remove the unobserved heterogeneity. The non-instrumental variable (IV) FE estimator was used on expenditure items for which income is exogenous, with the IV-FE estimator used on expenditure items for which income is endogenous. To address the endogeneity of income, two sets of instruments were used: (1) the deviation of heat index from its normal values and (2) the number of tropical cyclones that crossed the provinces.
Weather Events and Welfare in Philippine Households