Averting Catastrophes that Kill
We face a variety of potential catastrophes; nuclear or bioterrorism, a climate catastrophe, and a "mega-virus" are examples. Martin and Pindyck (AER 2015) showed that decisions to avert such catastrophes are interdependent, so that simple cost-benefit analysis breaks down. They assumed that catastrophic events cause "destruction," i.e., a reduction in the stream of consumption. But some catastrophes cause death instead of, or in addition to, destruction. Here we incorporate death in a model of catastrophe avoidance, and show how it affects the interdependence of catastrophic events and the "willingness to pay" to avoid those events.
|Date of creation:||Apr 2017|
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- Chris Rohlfs & Ryan Sullivan & Thomas Kniesner, 2015.
"New Estimates of the Value of a Statistical Life Using Air Bag Regulations as a Quasi-experiment,"
American Economic Journal: Economic Policy,
American Economic Association, vol. 7(1), pages 331-359, February.
- Rohlfs, Chris & Sullivan, Ryan & Kniesner, Thomas J., 2012. "New Estimates of the Value of a Statistical Life Using Air Bag Regulations as a Quasi-Experiment," IZA Discussion Papers 6994, Institute for the Study of Labor (IZA).
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