The complex politics of catastrophe economics

The purpose of this essay is to explore the implications for public policy of the assumption that policy makers exhibit the same cognitive and perceptual problems as other citizens regarding catastrophic events. The key conclusion is that the same factors that cause citizens to behave inefficiently in preparing for and responding to disasters also will cause inefficiencies in policies concerning catastrophic events. Among the more important expected pathologies of disaster policies are: (1) a failure to balance benefits and costs at the margin for different types of disasters, due to cognitive pathologies such as availability and overconfidence; (2) a tendency for policy to underinvest in protection and overinvest in response; and (3) a skepticism for policies based on sound insurance principles for spreading costs and assessing claims.     

National survey evidence on disasters and relief: Risk beliefs, self-interest, and compassion

A nationally representative sample of respondents estimated their fatality risks from four types of natural disasters, and indicated whether they favored governmental disaster relief. For all hazards, including auto accident risks, most respondents assessed their risks as being below average, with one-third assessing them as average. Individuals from high-risk states, or with experience with disasters, estimate risks higher, though by less than reasonable calculations require. Four-fifths of our respondents favor government relief for disaster victims, but only one-third do for victims in high-risk areas. Individuals who perceive themselves at higher risk are more supportive of government assistance.     

Private investment and government protection

Hurricane Katrina did massive damage because New Orleans and the Gulf Coast were not appropriately protected. Wherever natural disasters threaten, the government—in its traditional role as public goods provider—must decide what level of protection to provide to an area. It does so by purchasing protective capital, such as levees for a low-lying city. (“Protection” also consists of prohibiting projects that raise risk levels, such as draining swamps.) We show that if private capital is more likely to locate in better-protected areas, as would be expected, then the marginal social value of protection will increase with the level of protection provided. That is, the benefit function is convex, contrary to the normal assumption of concavity. When the government protects and the private sector invests, there may be multiple Nash equilibria due to the ill-behaved nature of the benefit function. Policy makers must compare them, rather than merely follow local optimality conditions, to find the equilibrium offering the highest social welfare. There is usually considerable uncertainty about the amount of private investment that will accompany any level of protection, further complicating the government’s choice problem. We show that when deciding on the level of protection to provide now, the government must take account of the option value of increasing the level of protection in the future. We briefly examine but dismiss the value of rules of thumb, such as building for 1000-year floods or other rules that ignore benefits and costs.     

Opportunities and Challenges for Studying Disaster Survivors

Studying survivors of natural disasters and traumatic events provides a unique opportunity to address some of the important and difficult questions in psychology and other social sciences. However, such an opportunity does not come without challenges. Several methodological challenges to studying survivors of natural disasters are discussed, including recruiting participants, choosing appropriate procedures, and the safety of data collectors. Several ethical issues are also presented, such as the ability of participants to make decisions, the impact of participating, and the importance of informed consent. In addition, approaches are suggested that help to deal with these methodological and ethical challenges. We conclude that while attention must be focused on methodological and ethical considerations, research stemming from natural disasters should be employed to answer important basic and applied conceptual questions and address issues of practice and policy, while assuring that steps have been taken to protect participants and that the potential risks are minimal.     

公共气象信息知情权的伦理反思

频发的自然灾害,如台风、雪灾、地震、海啸等公共危机促使我们从伦理的层面反思公共气象信息知情权问题。公共气象信息知情权是公众的一项基本权利,因为公共气象信息知情权是个人生命权和健康权的延伸。因此,对公共气象信息知情权的保护,体现了政府对广大人民群众生命健康的尊重。公共气象信息知情权在人权观念方面带来的一个重要的启示是：公共气象信息知情权也是生存权,属于基本人权的范畴—获得公共气象信息才能维持生存,了解公共气象信息是生存的基本条件,公共气象信息误导就是对生命的误导。可见,公共气象信息知情权是保护健康权利和生命权利的基础。     

Workers' Compensation Costs When Maximum Benefits Change

“Natural experiment” studies of benefit utilization in workers' compensation have used changes in statutory maximum payments to estimate claim duration elasticities. These studies so far have been limited to using insurance claims data rather than information on individual workers. The result is a failure to estimate changes in claim frequency or the average costs per worker as maximums change. This is the first natural experiment study to analyze changes in both the frequency and severity of workers' compensation claims using data from a single large U.S. employer. In addition, the utilization response to benefit decreases as well as benefit increases is examined.     

Adjusting to natural disasters

People adjust to the risks presented by natural disasters in a number of ways; they can move out of harms way, they can self protect, or they can insure. This paper uses Hurricane Andrew, the largest U.S. natural disaster prior to Katrina, to evaluate how people and housing markets respond to a large disaster. Our analysis combines a unique ex post database on the storm’s damage along with information from the 1990 and 2000 Censuses in Dade County, Florida where the storm hit. The results suggest that the economic capacity of households to adjust explains most of the differences in demographic groups’ patterns of adjustment to the hurricane damage. Low income households respond primarily by moving into low-rent housing in areas that experienced heavy damage. Middle income households move away to avoid risk, and the wealthy, for whom insurance and self-protection are most affordable, appear to remain. This pattern of adjustment with respect to income is roughly mean neutral, so an analysis based on measures of central tendency such as median income would miss these important adjustments.     

Prospective reference theory: Toward an explanation of the paradoxes

This article develops a variant of the expected utility model termed prospective reference theory. Although the standard model occurs as a limiting case, the general approach is that individuals treat stated experimental probabilities as imperfect information. This model is applied to a wide variety of aberrant phenomena, including the Allais paradox, the overweighting of low-probability events, the existence of premiums for certain elimination of risks, and the representativeness heuristic. The prospective reference theory model predicts most of the observed behavioral patterns rather than being potentially reconcilable with such phenomena.Kenneth Arrow and Robert Viscusi provided helpful comments. A preliminary version of this article was presented at the 1987 AEA meetings.     

Transforming the Local Capacity on Natural Disaster Risk Reduction in Bangladeshi Communities: A Social Work Perspective

Bangladesh has been a severe victim of its various sporadic natural disasters—flood, cyclone and storm surge, flash flood, drought, tornado, riverbank erosion, and landslide. Familial and societal lives and security of people are being seriously disturbed by these natural calamities every year. They also bring deadly damage to the economy and general environment of the country. Natural disasters cannot be pre‐empted at all, but their damage can be mitigated with effective responses. Social work has been a profession notably known for its intervention of people's vulnerability to natural and man‐made disasters. This concept paper discusses relevant intervention strategies and approaches to transform the local capacity of communities on natural disaster risk reduction in light of the social work profession.     

Environmental Disasters and Disastrous Policies: An Overview from India

Though disasters have been important recurring events in South Asia, the policy framework for addressing the issues arising from disaster has been weak. Taking an alternative perspective on the definition of disaster itself, this article attempts to address the cause of the increasing numbers of disasters in India. I posit that the nation‐state still understands disasters as a natural phenomenon, rather than as an intersection between conditions of vulnerability and actual hazards. This is to be observed in the disaster policies adopted. Hence, this article emphasizes the inclusion of ‘vulnerability’ as paramount.     

Estimating Fatalities Induced by the Economic Costs of Regulations

Regulatory costs are paid by individuals, which leaves them with less disposable income. Since individuals on average use additional income to make their lives safer and healthier, the regulatory costs lead to higher mortality risks and fatalities. Based on data from the National Longitudinal Mortality Study relating income to the risk of dying, approximately each $5 million of regulatory cost induces a fatality if costs are borne equally among the public. If costs are borne proportional to income, approximately $11.5 million in regulatory costs induces a fatality. Cost-induced fatalities disproportionally burden the poor and minorities, particularly blacks.     

Safety First: Recognizing and Managing the Risks to Child Participants in Magnetic Resonance Imaging Research

Specialized and up-to-date knowledge is required to identify and manage the risks associated with advanced biomedical research. Additional complexities need to be considered when the research involves infants or young children. In this article, we focus on recent information about the physical risks of pediatric magnetic resonance imaging research and highlight information gaps. With an eye to assisting institutional review boards and researchers, we consider strategies for the management of these risks and formulate key questions aimed at exposing hidden hazards. Institutional review boards should ask these questions, and researchers should bear them in mind as they develop research protocols.     

Individuals' Estimates of the Risks of Death: Part II—New Evidence

Using new survey data, we test the hypothesis that individuals' perceptions of health and safety risks are unbiased. While we find that respondents' estimates of those risks are sensitive to the information they are given to anchor their responses, we find no evidence to support the widely held view that people tend to underestimate the frequency of relatively common risks. The slight tendency for respondents to overestimate the frequency of extremely unlikely events can plausibly be interpreted as truncation bias. Overall, the accuracy of our subjects' estimates varies in a manner that is fully consistent with simple conjectures about the health and safety information that is of greatest relevance to them in the conduct of their lives. The marked difference between the results of our survey and those of previous studies appears to be attributable to the practical implications of costly information and the common failure of investigators to account for the fact that rational individuals will choose to acquire less than full information about many uncertain events.     

Terrorism and Probability Neglect

When strong emotions are involved, people tend to focus on the badness of the outcome, rather than on the probability that the outcome will occur. The resulting “probability neglect” helps to explain excessive reactions to low-probability risks of catastrophe. Terrorists show a working knowledge of probability neglect, producing public fear that might greatly exceed the discounted harm. As a result of probability neglect, people often are far more concerned about the risks of terrorism than about statistically larger risks that they confront in ordinary life. In the context of terrorism and analogous risks, the legal system frequently responds to probability neglect, resulting in regulation that might be unjustified or even counterproductive. But public fear is itself a cost, and it is associated with many other costs, in the form of “ripple effects” produced by fear. As a normative matter, government should reduce even unjustified fear, if the benefits of the response can be shown to outweigh the costs.     

Alternative institutional responses to asbestos

The level of asbestos risk varies widely, with insulation workers facing risks many orders of magnitude greater than other groups, such as school children. After a period of regulatory neglect, asbestos risks are now among the mos stringently regulated risks, with costs per case of cancer prevented on the order of $100 million. Asbestos litigation triggered much of the public action against asbestos, as asbestos cases constituted the majority of all product liability cases in the federal courts from 1988 to 1991. The litigation costs have, however, been substantial, almost three times as great as the amounts transferred to asbestos disease victims. Risk communication potentially could promote efficient risk levels and victim compensation.     

日本突发事件危机管理探析

突发事件与危机管理是现代政府尤其重视的内容。日本缘于多发的自然灾害,建立了较完备的危机管理机制。在危机管控组织方面,由内阁官房负责的危机管理机构在减灾防灾中实现了预防第一、落实有力、多方联动的管制应对效果;制度建设上,在经历三次重大自然灾害为主的危机中逐步完善法律体系,形成了以《灾害对策基本法》为核心框架的50余部法律,为灾害应对、突发事件与危机管理提供制度上的保障;在技术上,通过明确信息流,强化地质气象及预警系统降低了危机风险;在危机解决力量上,消防组织、警察组织、自卫队及民众力量为减少危机与灾害提供有力保障。日本的危机管理在制度、组织、救援力量等多方面为各国提供了宝贵的经验。     

Mothers of adolescent girls 1

Abstract

It is increasingly difficult to distinguish natural events from those influenced by human actions. Furthermore, researchers in various fields have established that the level of devastation and the predicted likelihood of recovery of neighborhoods and communities correspond with the amount of political and socioeconomic capital held by neighborhoods and communities prior to disasters such as the Hurricane Katrina. In this paper we analyze the significance of the discourse of “natural disasters” through the framework of social ecology. We contest the neutralist discourse of “natural disasters” by underscoring the numerous interdependent sociopolitical forces, which shape the context in which disasters occur.     

Stable International Environmental Agreements with a Stock Pollutant,Uncertainty and Learning

In this paper I address the question of how uncertainty about damage costs and the possibility of resolving that uncertainty in the future affects the incentives for countries to join an international environmental agreement. I use a two-period model with a stock pollutant where the number of countries generating pollution can be arbitrarily large. The stability concept employed is such that size of the stable IEA can be anywhere between 2 and the grand coalition of all countries depending on parameter values. The dynamic structure allows two different membership rules for an IEA: fixed (countries commit at the outset to be members for both periods) or variable (countries decide each period whether to join). I show that with fixed membership learning results in at least as high membership and global welfare as no learning (unless both the expected value and variance of damage costs are high). With variable membership, learning leads to higher membership (in the second period) but lower global welfare than no learning. For most parameter values variable membership results in higher global welfare than fixed membership.     

Mortality risks induced by the costs of regulations

Regulatory costs are ultimately paid for by the individuals in our society. The reduction in disposable income can lead to changes in purchasing, such as for safety and health care; stress, such as from job loss; and behavior, such as smoking or alcohol consumption. On average, these changes induce greater mortality risks and lead to premature deaths. This paper examines cases in which regulatory costs are primarily placed either on the general public or on individuals in a specific industry. Several policy issues concerning the mortality risks of regulatory costs are addressed. Neglecting the consideration of the fatalities induced by regulatory costs in the setting of regulations will lead to unnecessary deaths of Americans.     

On the Relevance of Informal Social Networks to Social Work Intervention

Summary Taking as its starting point the Barclay Committee's definitionof community in terms of local informal networks, this papersets out to cull some relevant material from the literatureof social networks and to use it to demonstrate the appropriatenessof orienting social work practice to the community. In suggestingan emphasis on supporting rather than supplanting existing informalcaring systems, it is made dear that, if motivated by parsimonysuch an approach risks irresponsibly increasing distress andsocial costs.