Averting Catastrophes: The Strange Economics of Scylla and Charybdis / Ian W.R. Martin, Robert S. Pindyck.

Format:

Book

Author/Creator:

Martin, Ian W.R.

Contributor:

National Bureau of Economic Research.

Pindyck, Robert S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20215.

NBER working paper series no. w20215

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Averting Catastrophes

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

How should we evaluate public policies or projects to avert, or reduce the likelihood of, a catastrophic event? Examples might include inspection and surveillance programs to avert nuclear terrorism, investments in vaccine technologies to help respond to a "mega-virus," or the construction of levees to avert major flooding. A policy to avert a particular catastrophe considered in isolation might be evaluated in a cost-benefit framework. But because society faces multiple potential catastrophes, simple cost-benefit analysis breaks down: Even if the benefit of averting each one exceeds the cost, we should not necessarily avert all of them. We explore the policy interdependence of catastrophic events, and show that considering these events in isolation can lead to policies that are far from optimal. We develop a rule for determining which events should be averted and which should not.

Notes:

Print version record

June 2014.