Focusing attention, defocusing policy: climate shocks and the attention– policy translation failure

Giorgos Galanis, Giorgio Ricchiuti and Ben Tippet

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper develops a diagnostic-expectations theory of climate focusing events. A disaster is diagnostic evidence about a latent hazard state, so voters overweight it when forming beliefs about future climate risk. This raises the perceived return to mitigation. But the same disaster destroys current output and raises reconstruction needs, tightening the resource constraint under which policy is produced. The paper’s central claim is not that focusing events fail to focus attention; rather, attention may fail to translate into policy. In a political-economy model with diagnostic expectations and risk-sensitive (Hansen–Sargent) preferences, we decompose the disaster response of mitigation into a diagnostic focusing channel and a resource-defocusing channel. Mitigation falls when the latter dominates. The model also yields a non-monotone role for disaster severity: more severe shocks raise both the value of mitigation and the resource squeeze, but in the upper tail the resource squeeze can compound while the marginal value of further probability reduction saturates. Risk-sensitive preferences generate this saturation effect: when perceived disaster probability is already high, stronger diagnosticity need not always increase mitigation. Evidence from the 1990 Western European windstorm cluster illustrates the mechanism.

JEL-codes: D72 D91 Q54 Q58 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2026-07
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