A Reply to a Replication of “Weathering Corruption” ( Journal of Law and Economics, 2008)

September, 2021

Cordis and Milyo replicate our study, which found a positive relationship between FEMA-provided disaster relief and public corruption in the US states. Our study used the corruption data that virtually every study of American corruption uses: PIN data. Using the same data, Cordis and Milyo find the same result. And using different corruption data from TRAC, they find a different result: no relationship between FEMA-provided disaster relief and public corruption. Unsurprisingly, different data produce different results. The meaning of that difference, however, is unclear, especially since the latter result, which implies that public actors do not respond rationally to incentives when making decisions regarding corrupt activities, contradicts the law of demand.

Flirting with Disaster

July 19, 2006

The federal government's top-down disaster response system is fundamentally flawed. The federal government usually has neither the incentive nor the information needed to effectively coordinate relief management. Thus, the best reforms to the Federal Emergency Management Agency would take control away from the federal government, not give it more.

Read the article at Cato.org.

The Political Economy of FEMA

January 1, 2007

This paper investigates the political economy of FEMA after its post-9/11 merger with the Department of Homeland Security. Using panel data for the post-DHS merger but pre-Katrina  period, this study examines how FEMA’s much-debated reorganization has impacted the strong political  influences on disaster declaration and relief spending that existed before FEMA’s reorganization. The study finds that although politically-important states for the president continue to have a higher rate of disaster declaration, disaster expenditures are no longer higher in states with congressional representation on FEMA oversight committees. These results suggest reorganization has reduced some of the political pressures within FEMA.

Read the article at Peter Leeson's website.

Centralization Proves Inadequate to Disaster Aid

July 1, 2008

Nobel Laureate F.A. Hayek called central planning the “fatal conceit.” Hurricane Katrina demonstrated just how fatal this conceit can be. Central planning for natural disaster relief, just like in all other affairs, is destined to fail. Private sector activity, also as in all other affairs, provides the best chance of succeeding. 

Read the article at the Journal of International Peace Operations.

 

 

Costly Price Discrimination

April 1, 2008

Standard theory neglects that enacting price discrimination is costly to firms. When this costliness is accounted for, perfect price discrimination is often socially inefficient. For pure monopolists it is sometimes socially inefficient. For monopolistic competitors it is always socially inefficient.

Read the article at ScienceDirect.

Race, Politics, and Punishment

June 1, 2011

This paper empirically evaluates two competing theories of electoral accountability in the context of New Orleans’ 2006 mayoral election. According to the democratic efficiency theory, voters can successfully punish ineffective political agents by removing them from office. In contrast, the public choice theory argues that the bundled nature of political goods prevents voters from successfully holding ineffective politicians accountable. We find that although there is limited support for the punishment effect predicted by the democratic efficiency theory, this effect is overwhelmed by the fact that the bundle of goods politicians offer contains elements that pull in opposing directions. This prevents the punishment effect from having any real impact, leading to democratic failure. Our results support the public choice theory of electoral (un)accountability.

Read the article at SpringerLink or SSRN

Do Intergovernmental Grants Create Ratchets in State and Local Taxes?

September 17, 2010

Every dollar in temporary federal grants leads to 40 cents of tax increases. Economists have long suggested the existence of a “flypaper effect,” wherein federal money given to states prompts additional spending. However, empirical research shows that federal grants to states also leads to additional state and local taxes when federal spending decreases.

As Milton Friedman pointed out, there is nothing as permanent as a temporary government program. As a consequence, when states accept federal aid to create or expand public programs today, they will inevitably be forced to decide whether to cut the program or raise taxes when federal aid ends.

Empirical evidence from the previous 15 years shows that tax increases are the likely result, averaging around 40 cents in state and local tax hikes for every federal grant dollar.

The Political Economy of FEMA: Did Reorganization Matter?

December, 2009

This West Virginia University Working Paper investigates the political economy of FEMA’s post-9/11 merger with the Department of Homeland Security. Using panel data for the post-DHS merger but pre-Katrina period, the authors examine how FEMA’s much-debated reorganization has impacted the strong political influences on disaster declaration and relief spending identified by Garrett and Sobel (2003) before FEMA’s reorganization. The authors  find that although politically-important states for the president continue to have a higher rate of disaster declaration, disaster expenditures are no longer higher in states with congressional representation on FEMA oversight committees. These results suggest reorganization has reduced political pressures within FEMA. Tullock’s theory of bureaucracy helps to explain this change.

View this paper

Photo courtesy of Flickr user Daquella Manera.

 

The Impact of FEMA Reorganization: Implications for Policy

February, 2009

Prior to 2003, the Federal Emergency Management Agency (FEMA) was an independent agency with direct congressional oversight. But in the wake of the September 11th attacks, FEMA was integrated into the newly-formed Department of Homeland Security (DHS).  This merger, which severed the congressional influence over FEMA’s decision making, brought about changes in how FEMA allocates disaster-relief funds.

This policy comment discusses the impact and implications of FEMA’s move to DHS. Understanding how this merger affected the federal government’s disaster-relief decision making is important when considering future decisions to reorganize existing government agencies.

Citation (Chicago Style):

Coyne, Christopher, Peter Leeson,  and Russell Sobel. "The Impact of FEMA Reorganization: Implications for Policy." Mercatus Policy Series, Policy Comment No. 24. Arlington, VA: Mercatus Center at George Mason University, February 2009.

Government's Response to Hurricane Katrina

April 3, 2006

The authors use public choice theory to explain the failure of FEMA and other governmental agencies to carry out effective disaster relief in the wake of Hurricane Katrina. The areas in which they focus are: (1) the tragedy of the anti-commons resulting from layered bureaucracy, (2) a type-two error policy bias causing over cautiousness in decision making, (3) the political manipulation of disaster declarations and relief aid to win votes, (4) the problem of acquiring timely and accurate preference revelations, (5) glory seeking by government officials, and (6) the shortsightedness effect causing a bias in governmental decision making.

Read the paper at SpringerLink.

Citation: Leeson, Peter and Russell Sobel. "Government's Response to Hurricane Katrina: A Public Choice Analysis." Public Choice 127 (2006): 55-73.