Winners and Losers: Some Thoughts about the Political Economy of Disaster

While it is obvious disasters are negative events causing injury and death, damage, and destruction, macro-economic studies show little long-term economic effects from disaster. That is because disasters create both losers and winners, and these balance out. Who loses and who wins is not random but a result of public policy decisions. The losers include individuals who are injured, lose their jobs, lose their home, and families who lose a wage earner or a place of residence. The winners include individuals who earn extra money because they are involved in emergency response or restoration. They include wage earners and their families. They include some businesses, not others. They include communities which, because of substantial assistance, end up better off because of the disaster. Winners and losers are created by decisions about where to build a dam, who should receive what sort of assistance. This article is not based on new research but on an analysis of existing material. More research needs to be done on the economic effects on individuals and businesses and on communities and of the economic impact of policy decisions.