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The Complex Politics of Catastrophe Economics

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  • Noll, Roger G

Abstract

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. Copyright 1996 by Kluwer Academic Publishers

Suggested Citation

  • Noll, Roger G, 1996. "The Complex Politics of Catastrophe Economics," Journal of Risk and Uncertainty, Springer, vol. 12(2-3), pages 141-146, May.
    • Handle: RePEc:kap:jrisku:v:12:y:1996:i:2-3:p:141-46
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    Cited by:

    1. Merrifield, John, 2002. "A general equilibrium analysis of the insurance bonding approach to pollution threats," Ecological Economics, Elsevier, vol. 40(1), pages 103-115, January.
    2. Murguia, Juan M. & Hossiso, Kassu W. & Lence, Sergio H., 2018. "Rural land titling and property rights: does legislating smallholdings as a non-seizable family asset improve smallholder family farmers’ welfare?," ISU General Staff Papers 201807010700001056, Iowa State University, Department of Economics.
    3. Vos, R.P. & Velasco, M. & Labastida, E., 1999. "Economic and social effects of "El Nino" in Ecuador, 1997-8," ISS Working Papers - General Series 19037, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    4. Jerry R. Skees & Panos Varangis & Donald F. Larson & Paul Siegel, 2002. "Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks?," WIDER Working Paper Series DP2002-23, World Institute for Development Economic Research (UNU-WIDER).
    5. Liu, Shuang & Aurambout, Jean-Philippe & Villalta, Oscar & Edwards, Jacqueline & De Barro, Paul & Kriticos, Darren J. & Cook, David C., 2015. "A structured war-gaming framework for managing extreme risks," Ecological Economics, Elsevier, vol. 116(C), pages 369-377.
    6. Vos, Rob & Velasco, Margarita & De Labastida, Edgar, 2006. "Economic and Social Effects of El Niño in Ecuador, 1997-1998," IDB Publications (Working Papers) 2305, Inter-American Development Bank.
    7. Catherine E. Althaus, 2005. "A Disciplinary Perspective on the Epistemological Status of Risk," Risk Analysis, John Wiley & Sons, vol. 25(3), pages 567-588, June.
    8. Koellinger, Ph.D. & Treffers, T., 2012. "Joy leads to Overconfidence, and a Simple Remedy," ERIM Report Series Research in Management ERS-2012-001-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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