Feb 18, 2014

Impact of natural disaster on public sector corruption

The major findings of this study are the following. (1) Natural disasters lead the public sector to become corrupt. (2) Floods have a significant effect on corruption; however, other types of disaster do not exhibit such effects. This indicates that disasters that are foreseeable but that do not threaten life trigger strategic behavior in the victims. In addition, damage is limited to specific areas, which triggers the formation of interest groups. That is, people living in an area in which floods occur frequently anticipate disaster compensation, which leads to a moral hazard problem. (p. 15). 
That is from the conclusions of this paper by Eiji Yamamura (Public Choice, Jan. 2014). A draft is here (September 2013).  

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