Welfare Costs of Catastrophes
Lost Consumption and Lost Lives
Bibliographic Data
| ID | 9949720 |
|---|---|
| Authors | Ian Martins (0000-0001-8373-5317, London School of Economics and Political Science), Ian W R Martin (London School of Economics and Political Science), Robert S Pindyck (0000-0001-8296-9875, Sloan School of Management, USA, corresponding author) |
| Year | 2020 |
| Volume | 131 |
| Issue | 634 |
| Pages | 946-969 |
| Publication date | 2020-08-25 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1093/ej/ueaa099 |
| OpenAlex | W3124770337 |
| Language | EN |
| Citations received | 5 |
| References cited | 31 |
Most of the literature on the economics of catastrophes assumes that such events cause a reduction in the stream of consumption, as opposed to widespread fatalities. Here we show how to incorporate death in a model of catastrophe avoidance, and how a catastrophic loss of life can be expressed as a welfare-equivalent drop in consumption. We examine how potential fatalities affect the policy interdependence of catastrophic events and ‘willingness to pay’ (WTP) to avoid them. Using estimates of the ‘value of a statistical life’ (VSL), we find the WTP to avoid major pandemics, and show that it is large (10% or more of annual consumption) and partly driven by the risk of macroeconomic contractions. Likewise, the risk of pandemics significantly increases the WTP to reduce consumption risk. Our work links the VSL and consumption disaster literatures
Consumption (sociology · Coronavirus disease 2019 (COVID-19 · Economics · Microeconomics · Pandemic · Public economics · Welfare · Willingness to pay · Agricultural risk and resilience · Climate Change and Health Impacts · Insurance and Financial Risk Management
Global trends in emerging infectious diseases
The Three Horsemen of Riches
Rare Disasters and Asset Markets in the Twentieth Century
The Quantity and Quality of Life and the Evolution of World Inequality
The Value of Life and the Rise in Health Spending
The Value of a Statistical Life
Weighing Lives
Population Issues in Social Choice Theory, Welfare Economics, and Ethics
Updating the Accounts
Willingness to Pay and the Distribution of Risk and Wealth
Life and Growth
Environmental Protection, Rare Disasters and Discount Rates
Measuring the Value of a Statistical Life
| Unique citing works | 5 |
|---|---|
| Citations per year | 1 |
| Citation span | 2021 - 2026 (6) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 5 |