Planet Money – The natural disaster economist

Intro

In this episode of the “Planet Money” podcast, the host explores the work of economist Tatiana Durganuna, who specializes in studying the economic consequences of natural disasters. Through her research, she uncovers surprising insights about the long-term effects on individuals and communities, as well as the role of charitable giving and insurance markets in the aftermath of disasters.

Main Takeaways

Economic Consequences of Natural Disasters

• Tatiana Durganuna is an economist who specializes in studying natural disasters.
• Hurricanes are like natural experiments for economists because they are unpredictable and affect one group of people but not another.
• Tatiana’s research focuses on the long-term economic consequences of natural disasters on individuals and communities.
• We know a lot less about how individuals and communities recover from natural disasters compared to macroeconomic studies on a country’s GDP.

Charitable Giving and Natural Disasters

• Tatiana’s recent study on tornadoes looked at charitable donations and found that people are more likely to donate when the disaster is closer to home.
• Giving remains elevated in subsequent years.
• People feel good about giving and continue to give more because of that experience.

Insurance Markets and Climate Change

• The insurance market is in turmoil due to increasing risks of natural disasters.
• Insurance prices can be a useful tool to influence people to take seriously the consequences of climate change.

Long-Term Effects of Hurricanes

• A study on Hurricane Katrina found surprising results about the long-term effects on victims’ income levels.
• Researchers expected to find persistent long-term declines in income, but found that by 2007, victims had recovered back to pre-hurricane levels.
• By 2008, victims were making more money than they would have without the hurricane.
• The study used specialized and hard-to-access tax data to track individuals’ income over almost a decade.

Moving and Climate Change

• Hurricane Katrina caused people to move, and many ended up staying in places with higher wages and healthier communities, leading to increased earnings and longer lives.
• The question arises as to why people didn’t move earlier if they were better off leaving New Orleans.
• This question has ramifications for how we deal with climate change and when it’s worth it to stay or go.

Social and Cultural Context in Disaster Response

• Understanding the social and cultural context is crucial for effective disaster response.
• Local governments should be asking how to deal with these communities as a whole.

Summary

Economic Consequences and Charitable Giving

Tatiana Durganuna’s research sheds light on the long-term economic consequences of natural disasters, which often receive less attention compared to macroeconomic studies. Her study on tornadoes reveals that charitable giving increases after a natural disaster, and this giving remains elevated in subsequent years. People feel good about giving and continue to give more because of their positive experiences. This highlights the importance of solidarity and support in the aftermath of disasters.

Insurance Markets and Climate Change

The increasing risks of natural disasters have led to turmoil in the insurance market. Insurance prices can be a useful tool to influence people to take climate change seriously and consider the potential consequences. By making insurance more expensive for high-risk areas, individuals and communities are encouraged to take proactive measures to mitigate the impacts of climate change.

Long-Term Effects and Moving

A study on Hurricane Katrina challenges the assumption that natural disasters lead to long-term declines in income. Surprisingly, victims of Hurricane Katrina had recovered back to pre-hurricane income levels by 2007, and by 2008, they were making more money than they would have without the hurricane. This is attributed to the fact that many individuals ended up moving to places with higher wages and healthier communities. The study reveals the complex dynamics of post-disaster relocation and raises important questions about when it’s worth it to stay or go in the face of climate change.

Social and Cultural Context in Disaster Response

Understanding the social and cultural context is crucial for effective disaster response. Local governments should consider the needs and challenges of communities as a whole, rather than focusing solely on individual recovery. By taking a holistic approach, it becomes possible to address the underlying vulnerabilities and inequalities that disasters often exacerbate.

Conclusion

Natural disasters reveal deeper insights about society and the interconnectedness of various factors such as economics, charitable giving, insurance markets, and social context. These insights highlight the importance of resilience, preparedness, and proactive measures in mitigating the impacts of natural disasters. By studying natural disasters, we gain a better understanding of how society functions and can work towards building more resilient communities.