Weathering Corruption

Peter Leeson and Russell Sobel

Journal of Law and Economics, 2008, vol. 51, issue 4, 667-681

Abstract: Could bad weather be responsible for U.S. corruption? Natural disasters create resource windfalls in the states they strike by triggering federally provided natural-disaster relief. By increasing the benefit of fraudulent appropriation and creating new opportunities for such theft, disaster-relief windfalls may also increase corruption. We investigate this hypothesis by exploring the effect of disaster relief provided by the Federal Emergency Management Agency (FEMA) on public corruption. The results support our hypothesis. Each additional $100 per capita in FEMA relief increases the average state's corruption by nearly 102 percent. Our findings suggest notoriously corrupt regions of the United States, such as the Gulf Coast, are in part notoriously corrupt because natural disasters frequently strike them. They attract more disaster relief, which makes them more corrupt. (c) 2008 by The University of Chicago. All rights reserved.

Date: 2008
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