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Political Economy of Presidential Disaster Declarations and Federal Disaster Assistance

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  • Thomas Husted
  • David Nickerson

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.

Suggested Citation

  • Thomas Husted & David Nickerson, 2014. "Political Economy of Presidential Disaster Declarations and Federal Disaster Assistance," Public Finance Review, , vol. 42(1), pages 35-57, January.
    • Handle: RePEc:sae:pubfin:v:42:y:2014:i:1:p:35-57
    DOI: 10.1177/1091142113496131
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    References listed on IDEAS

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    Cited by:

    1. Jessi Troyan & Joshua Hall, 2019. "The Political Economy of Abandoned Mine Land Fund Disbursements," Economies, MDPI, vol. 7(1), pages 1-17, January.
    2. Thomas Husted & David Nickerson, 2022. "Governors and electoral hazard in the allocation of federal disaster aid," Southern Economic Journal, John Wiley & Sons, vol. 89(2), pages 522-539, October.
    3. Meri Davlasheridze & Qing Miao, 2021. "Does post-disaster aid promote community resilience? Evidence from federal disaster programs," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 109(1), pages 63-88, October.
    4. Davlasheridze, Meri & Fisher-Vanden, Karen & Allen Klaiber, H., 2017. "The effects of adaptation measures on hurricane induced property losses: Which FEMA investments have the highest returns?," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 93-114.
    5. Meri Davlasheridze & Qing Miao, 2019. "Does Governmental Assistance Affect Private Decisions to Insure? An Empirical Analysis of Flood Insurance Purchases," Land Economics, University of Wisconsin Press, vol. 95(1), pages 124-145.
    6. Matthew Davis & Mary Eschelbach Hansen & Thomas Husted, 2018. "The Impact of Political Influence on Appointees: Evidence from the Small Business Administration Disaster Loan Program," Southern Economic Journal, John Wiley & Sons, vol. 84(3), pages 771-785, January.
    7. Yu Shi & Jingran Sun, 2021. "The Influence of Neighboring Jurisdictions Matters: Examining the Impact of Natural Disasters on Local Government Fiscal Accounts," Public Finance Review, , vol. 49(3), pages 435-463, May.
    8. Nakul Kumar, 2016. "The Political Economy of Intergovernmental Transfers—Evidence from Indian Disaster Relief," Journal of South Asian Development, , vol. 11(3), pages 261-275, December.

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