August, 2015

Austrian Contributions to the Literature on Natural and Unnatural Disasters

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Austrian insights on the limits of central planning, the pervasiveness of knowledge problems, and the importance of the entrepreneur in coordinating social change have yielded substantive contributions to the literature on how individuals and communities respond to both natural and unnatural, or manmade, disasters. Austrian economists have examined the political economy of natural disasters, disaster relief and recovery efforts, the economic effects of extended wars, post-conflict societal reconstitution, and the effectiveness of humanitarian aid. This literature advances two main findings: (1) that centralized governments are likely to be ineffective at providing the goods and services that are necessary for community recovery and (2) that decentralized efforts are better suited to address the needs of society, to discover the best course of action for producing and distributing these goods and services, and to adapt to changing needs, circumstances, and technology. This paper examines the Austrian theories utilized to examine disasters, provides a summary of the recent research on both natural and unnatural disasters, and proposes areas for future research.