Averting catastrophes: the strange economics of Scylla and Charybdis

Ian Martin and Robert Pindyck

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

Abstract: Faced with numerous potential catastrophes—nuclear and bioterrorism, megaviruses, climate change, and others—which should society attempt to avert? A policy to avert one catastrophe considered in isolation might be evaluated in cost-benefit terms. But because society faces multiple catastrophes, simple cost-benefit analysis fails: Even if the benefit of averting each one exceeds the cost, we should not necessarily avert them all. We explore the policy interdependence of catastrophic events, and develop a rule for determining which catastrophes should be averted and which should not.

Keywords: catastrophes; catastrophic events; disasters; willingness to pay; policy objectives; climate change; epidemics; pandemics; nuclear terrorism; bioterrorism (search for similar items in EconPapers)
JEL-codes: D81 Q5 Q54 (search for similar items in EconPapers)
Date: 2015-10-01
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (51)

Published in American Economic Review, 1, October, 2015, 105(10), pp. 2947 - 2985. ISSN: 0002-8282

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Related works:
Journal Article: Averting Catastrophes: The Strange Economics of Scylla and Charybdis (2015)
Working Paper: Averting Catastrophes: The Strange Economics of Scylla and Charybdis (2015)
Working Paper: Averting Catastrophes: The Strange Economics of Scylla and Charybdis (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:62139

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