The Welfare Costs of Superstorm Sandy

As most of the New York metropolitan region begins to get back to normal following the devastation caused by superstorm Sandy, researchers and analysts are trying to assess the total ?economic cost? of the storm. But what, exactly, is meant by economic cost? Typically, those tallying up the economic cost of a disaster think of two types of costs: loss of capital (property damage and destruction) and loss of economic activity (caused by disruptions). But there is another important type of economic loss that often is not estimated or discussed in policymaking decisions: loss of welfare or deterioration in quality of life. Here we focus on how superstorm Sandy (and other such disasters) can have widespread adverse effects on quality of life, and provide some illustrations of how one can try to put an approximate dollar value on this type of cost.