Little is known about whether the provision of aid in the aftermath of a large-scale natural disaster affects psychological well-being. We investigate the effects of housing assistance, a key element of the reconstruction program implemented after the 2004 Indian Ocean tsunami. Population-representative individual-level longitudinal data collected in Aceh, Indonesia, during the decade after the tsunami as part of the Study of the Tsunami Aftermath and Recovery (STAR) are used. Housing aid was targeted to people whose homes were destroyed and, to a lesser extent, damaged by the tsunami and to those who lived, at the time of the tsunami, in communities that sustained the greatest damage. The effects of receipt of aid on post-traumatic stress reactivity (PTSR) are examined using panel data models that take into account observed and unobserved individual-specific fixed characteristics that affect both PTSR and aid receipt, drawing comparisons in each survey wave between individuals who had been living in the same kecamatan
when the tsunami hit. Those who received aid have better psychological health; the effects increase with time since aid receipt and are the greatest at two years or longer after the receipt. The effects are concentrated among those whose homes were destroyed in the tsunami.
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