Difficulties in Making Implicit Government Risk-Bearing Partnerships Explicit

Edward Kane

Journal of Risk and Uncertainty, 1996, vol. 12, issue 2-3, 189-99

Abstract: This article explains how lobbying pressure intensifies tax-transfer inefficiencies in disaster prevention and relief. The social-welfare tradeoff in the government's joint provision of safety regulation and disaster relief is distorted by disinformational lobbying activity by disaster-exposed households and by conflict between principles of horizontal and vertical equity. Horizontal equity presupposes that no group of taxpayers wants to transfer wealth ex ante to equally wealthy disaster-exposed parties. But vertical equity implies that, when disaster strikes, households that were previously able to hide the mitigability of their exposure to a ratable hazard can nevertheless extract sizable transfers from other taxpayers ex post. Copyright 1996 by Kluwer Academic Publishers

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:12:y:1996:i:2-3:p:189-99

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