Economic Impacts of H. Katrina – not what you think!

The National Bureau of Economic Research recently issued a Working Paper titled: The Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns” by Tatyana Deryugina, Laura Kawano, Steven Levitt. A key finding”:

“…at least in this particular disaster, aid to cover destroyed assets and short-run income declines was sufficient to make victims finally whole. Our results provide some optimism regarding the costs of climate-change drive dislocation, especially when adverse events can be anticipated well in advance.”

It was written up in the Washington Post, but I have to say this is not one of the Post’s best reporting jobs, since one cannot even find the full title and source of the paper. Their title is: Incomes actually went up after Hurricane Katrina. But economists don’t know why. Surprising new research shows that people living in New Orleans were financially better off after Katrina.

The full paper, 47 pages, is available from NBER for a modest fee. The Diva has a copy she can share upon request, for educational use.

5 thoughts on “Economic Impacts of H. Katrina – not what you think!

  1. That wouldn’t explain why the incomes of those who stayed behind increased – that’s what the study is based on. However, there may have been an indirect effect. Note that in many ways the city’s revenues increased while the amount that it paid for direct assistance to the poor probably dropped (fewer poor = fewer dollars spent on services for the poor). At the same time, the city (using its own and state and federal dollars) was spending a great deal on restoring infrastructure. A large amount of that money went back to those left behind in the city (esp. if they were somehow involved in the recovery effort).

    In addition, the tremendous amount of neighborhood investment in places like Broadmoor increased the “social capital” of these neighborhoods – not too much of a stretch to see this result in more marriages.

    Two things that would be great to know:
    Is this a transient? The study only went up to 2010; did the increase endure?
    What did this look like geographically, i.e., which neighborhoods didn’t see an increase?

    Thanks, Claire. As always, you make us think.

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