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Chapter 17 Viscusi: The Hold-Up Problem

1 A brief summary of their work appears in Kunreuther (1976), with a more detailed exposition of the findings in Kunreuther et al. (1978).

2 Kunreuther (1976, p. 250).

3 These statistics, which are calculated using the data in Kunreuther (1976), are for flood insurance. The statistics for earthquake insurance are similar.

4 Viscusi and Zeckhauser (2006).

5 A fully articulated discussion of this policy proposal is presented in Kunreuther and Pauly (2005).

6 Viscusi and Zeckhauser (2003).

7 National Safety Council (2004, p. 29).

Chapter 18 Moss: The Peculiar Politics of American Disaster Policy

1 Although I am indebted to a great many people for helping me over the years to wrestle with the subject of federal disaster policy, I particularly wish to thank Stephanie Lo and Cole Bolton, who provided outstanding research assistance for this chapter.

2 A partial exception is the Federal Crop Insurance Corporation, though in fact farmers are not charged a premium (only a flat administrative fee) for catastrophic coverage. See the “Catastrophic Coverage (CAT)” listing under the “Crop Policies” section on the FCIC website (http://www.rma.usda.gov/policies/).

3 David Moss, When All Else Fails: Government as the Ultimate Risk Manager (Cambridge, MA: Harvard University Press, 2002), p. 254.

4 See President Cleveland’s veto statement, February 16, 1887, Ex. Doc. No. 175, as cited in Moss, When All Else Fails, pp. 254-255.

5 See Moss, When All Else Fails, pp. 258-259; Herbert Hoover, The Memoirs of Herbert Hoover: The Cabinet and the Presidency, 1920-1933, Vol. 2 (New York: Macmillan, 1952), p. 126.

6 Howard Kunreuther, Recovery from Natural Disasters: Insurance and Federal Aid (Washington, DC: American Enterprise Institute, 1973), p. 9.

7 Moss, When All Else Fails, p. 256; David Moss, “Courting Disaster? The Transformation of Federal Disaster Policy Since 1803,” in Kenneth A. Froot, ed., The Financing of Catastrophe Risk (Chicago: University of Chicago Press, 1999), pp. 314-320.

8 J. David Cummins, Michael Suher, and George Zanjani, “Federal Financial Exposure to Catastrophic Risk,” Draft Paper, November 30, 2007, p. 25 (Table 1a). Note that the data presented here are in nominal dollars. The authors also offer estimates in “2006 Exposure and Price Adjusted $,” which yield slightly different ratios: an overall federal coverage ratio (federal aid to total losses) of about 40 percent, a federal coverage ratio for uninsured losses of about 65 percent, and an emergency supplemental ratio of about 70 percent (Table 1b).

9 Howard Kunreuther and Louis Miller, “Insurance Versus Disaster Relief: An Analysis of Interactive Modelling for Disaster Policy Planning,” Public Administration Review 45, Special Issue: Emergency Management (January 1985): 148; also cited in Cummins, Suher, and Zanjani, “Federal Financial Exposure,” p. 2.

10 See, for example, Moss, “Courting Disaster,” pp. 338-339.

11 Moss, When All Else Fails, pp. 260-264. See also Howard Kunreuther, “The Case for Comprehensive Disaster Insurance,” Journal of Law & Economics 11, no. 1 (April 1968): 133-163; Douglas Dacy and Howard Kunreuther, The Economics of Natural Disasters: Implications for Federal Policy (New York: Free Press, 1969), esp. p. 235; and Kunreuther, Recovery from Natural Disasters.

12 Mancur Olson, Jr., The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, MA: Harvard University Press, 1965).

13 See CBS News/New York Times Poll, “The Economy, Gas Prices, and Hurricane Katrina,” September 9-13, 2005 (http://www.cbsnews.com/htdocs/CBSNews_polls/poll_091405_Katrina.pdf, accessed on February 28, 2009); Associated Press/Ipsos poll conducted by Ipsos-Public Affairs, September 16-18, 2005 (http://www.pollingreport.com/disasters.htm, accessed on February 28, 2009).

14 See also 1995 Insurance Research Council poll (cited in Moss, “Courting Disaster”), which found “87 percent of Americans