TY  - JOUR
AU  - Kunreuther,Howard
AU  - Pauly,Mark
TI  - Rules Rather Than Discretion: Lessons from Hurricane Katrina
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12503
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12503
L1  - http://www.nber.org/papers/w12503.pdf
N1  - Author contact info:
Howard Kunreuther
Operations and Information Management
The Wharton School
University of Pennsylvania
3730 Walnut Street, 500 JMHH
Philadelphia, PA 19104-6366
Tel: 215/898-4589
Fax: 215/573-2130
E-Mail: kunreuther@wharton.upenn.edu

Mark Pauly
 Department of Health Care Management
University of Pennsylvania
208 Colonial Penn Center
3641 Locust Walk
Philadelphia, PA  19104-6218
Tel: NA
Fax: NA
E-Mail: pauly@wharton.upenn.edu
AB  - This paper explores options for programs to be put in place prior to a disaster to avoid large and often poorly-managed expenditures following a catastrophe and to provide appropriate protection against the risk of those large losses which do occur. The lack of interest in insurance protection and mitigation by property owners and by public sector agencies prior to a disaster often creates major problems following a catastrophic event for victims and the government.  Property owners who suffer severe damage may not have the financial resources easily at hand to rebuild their property and hence will demand relief. The government is then likely to respond with costly but poorly targeted disaster assistance. To avoid these large and often uneven ex post expenditures, we consider the option of mandatory comprehensive private disaster insurance with risk based rates. It may be more efficient to have an ex ante public program  to ensure coverage of catastrophic losses and to subsidize low income residents who cannot afford coverage rather than the current largely ex post public disaster relief program.
ER  -