The federal government provided $296 billion in disaster relief for catastrophic events in the US between 2001 and 2019. However, excessive bailouts may encourage economic activity to remain in exposed areas. This column shows that increased post-disaster efforts due to political motives result in more people living in hazard-prone coastal regions. A dynamic spatial general equilibrium model predicts that current post-disaster policies improve aggregate welfare at the expense of overall GDP and productivity losses, and encourage sorting into exposed areas.
Nothing contributes so much to the prosperity and happiness of a country as high profits