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- Title
Averting Catastrophes: The Strange Economics of Scylla and Charybdis<sup>†</sup>.
- Authors
Martin, Ian W. R.; Pindyck, Robert S.
- Abstract
Faced with numerous potential catastrophes-nuclear and bioterrorism, mega-viruses, 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. (JEL D61, Q51, Q54)
- Subjects
DISASTERS; RISK assessment -- Mathematical models; RISK -- Mathematical models; CATASTROPHE modeling; SCYLLA &; Charybdis (Greek mythology); POTENTIALITY theory (Philosophy); DISASTERS &; economics
- Publication
American Economic Review, 2015, Vol 105, Issue 10, p2947
- ISSN
0002-8282
- Publication type
Article
- DOI
10.1257/aer.20140806