Political Economy of Presidential Disaster Declarations and Federal Disaster Assistance

Thomas Husted () and David Nickerson

Public Finance Review, 2014, vol. 42, issue 1, 35-57

Abstract: Billions of dollars have been transferred to state governments for disaster recovery. Owing to the discretionary authority of the president in these decisions, moral hazard may influence approval of such requests. We test within a model of recursive choice the hypothesis that the sequential executive decisions to grant disaster declarations and the conditional amount of aid allocated are affected by political incentives. We combine expenditure and approval data from FEMA with state-level census and political data for the period 1969 through 2005. After accounting for the severity of flood damage in the state and the ability of the state to recover, an incumbent president is more likely to grant disaster declarations when facing reelection, particularly in states with a larger number of electoral votes and in states with a governor from the same political party as the president. We also find Democratic presidents award more disaster aid than their Republican counterparts.

Keywords: presidential disaster declaration; moral hazard; political economy; sequential choice (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:42:y:2014:i:1:p:35-57

DOI: 10.1177/1091142113496131

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