Journal of Risk and Uncertainty

, Volume 33, Issue 1–2, pp 37–54 | Cite as

Adjusting to natural disasters

  • V. Kerry Smith
  • Jared C. Carbone
  • Jaren C. Pope
  • Daniel G. Hallstrom
  • Michael E. Darden
Article

Abstract

People adjust to the risks presented by natural disasters in a number of ways; they can move out of harms way, they can self protect, or they can insure. This paper uses Hurricane Andrew, the largest U.S. natural disaster prior to Katrina, to evaluate how people and housing markets respond to a large disaster. Our analysis combines a unique ex post database on the storm’s damage along with information from the 1990 and 2000 Censuses in Dade County, Florida where the storm hit. The results suggest that the economic capacity of households to adjust explains most of the differences in demographic groups’ patterns of adjustment to the hurricane damage. Low income households respond primarily by moving into low-rent housing in areas that experienced heavy damage. Middle income households move away to avoid risk, and the wealthy, for whom insurance and self-protection are most affordable, appear to remain. This pattern of adjustment with respect to income is roughly mean neutral, so an analysis based on measures of central tendency such as median income would miss these important adjustments.

Keywords

Natural hazards Economic adjustment Hurricanes 

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Copyright information

© Springer Science + Business Media, LLC 2006

Authors and Affiliations

  • V. Kerry Smith
    • 1
  • Jared C. Carbone
    • 2
  • Jaren C. Pope
    • 3
  • Daniel G. Hallstrom
    • 4
  • Michael E. Darden
    • 5
  1. 1.Department of EconomicsArizona State UniversityTempe
  2. 2.Department of EconomicsWilliams CollegeWilliamstownMA
  3. 3.Department of Agricultural and Applied EconomicsVirginia TechBlacksburg
  4. 4.CEnREPNorth Carolina State UniversityRaleigh
  5. 5.Department of EconomicsUniversity of North CarolinaChapel Hill

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