Abstract
This article explains how lobbying pressure intensifies tax-transfer inefficiencies in disaster prevention and relief. The social-welfare tradeoff in the government's joint provision of safety regulation and disaster relief is distorted by disinformational lobbying activity by disaster-exposed households and by conflict between principles of horizontal and vertical equity. Horizontal equity presupposes that no group of taxpayers wants to transfer wealth ex ante to equally wealthy disaster-exposed parties. But vertical equity implies that, when disaster strikes, households that were previously able to hide the mitigability of their exposure to a ratable hazard can nevertheless extract sizable transfers from other taxpayers ex post.
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Kane, E.J. Difficulties in making implicit government risk-bearing partnerships explicit. J Risk Uncertainty 12, 189–199 (1996). https://doi.org/10.1007/BF00055793
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DOI: https://doi.org/10.1007/BF00055793