We all know that modern life is safer than previous times. Thus, when shocks such as Hurricane Katrina hit they are pretty "shocking". This article below poses an interesting puzzle. Based on survey evidence, people living in hurricane zones are under-investing in self protection against the anticipated new wave of storms. Why?
1. They trust that government will ex-post save them (i.e moral hazard)
2. They under-estimate the probability that a storm will strike this year (if you believe in the law of small numbers then Katrina should have raised people's subjective assessment of a big storm this year)
3. They are risk lovers
4. To quote this NYT articles, "It's like a psychological issue — 'If I don't think about bad things, bad things won't happen.' " #4 here is interesting can it be tested?
May 31, 2006
As Hurricane Season Looms, States Aim to Scare
By ABBY GOODNOUGH
MIAMI, May 30 — Convinced that tough tactics are needed, officials in hurricane-prone states are trumpeting dire warnings about the storm season that starts on Thursday, preaching self-reliance and prodding the public to prepare early and well.
Cities are circulating storm-preparation checklists, counties are holding hurricane expositions at shopping malls and states are dangling carrots like free home inspections and tax-free storm supplies in hopes of conquering complacency.
But the main strategy, it seems, is to scare the multitudes of people who emergency officials say remain blasé even after last year's record-breaking storm season.
To persuade residents to heed evacuation orders, the Florida Division of Emergency Management is broadcasting public service announcements with recordings of 911 calls placed during Hurricane Ivan in 2004.
"The roof has completely caved in on us," a woman cries as chilling music swells, only to be told that rescuers cannot come out during the storm.
Speaking of the tactics, Craig Fugate, Florida's emergency management director, said last week at a news conference in Tallahassee, "We're going to use a sledgehammer."
This save-yourselves approach comes after government agencies were overwhelmed by pleas for help after last year's storms and strongly criticized as not responding swiftly or thoroughly enough to the public need. Now, officials have said repeatedly, only the elderly, the poor and the disabled should count on the government to help them escape a hurricane or endure its immediate aftermath.
Mississippi, where more than 200 residents died in Hurricane Katrina, unrolled a "Stay Alert. Stay Alive" hurricane awareness campaign in April. State officials told residents what to pack in a "go-kit" for evacuating (flashlight, radio, nonelectric can opener) and, like many others, commanded them to stockpile at least three days' worth of water and food.
Horry County, S.C., home to Myrtle Beach, held a hurricane exposition last month and is giving similar presentations at Kiwanis clubs and homeowners associations.
"The big shortfall is complacency with the community," said Randall Webster, director of Horry County Emergency Management. "Our main theme is, take interest as an individual and make preparations."
But will it work? Emergency management officials groaned this month at a poll by Mason-Dixon Polling and Research Inc., which found that of 1,100 adults along the Atlantic and Gulf Coasts, 83 percent had taken no steps to fortify their homes this year, 68 percent had no hurricane survival kits and 60 percent had no family disaster plan.
"I can't rightfully say I see any increased sense of people getting ready," said Larry Gispert, emergency management director in Hillsborough County, Fla., home to Tampa. "It's like a psychological issue — 'If I don't think about bad things, bad things won't happen.' "
In Nags Head, N.C., Jimmy Austin, a former commercial fisherman who now operates his own seafood market, said he was unfazed by this year's predictions, some of which suggest that the Carolinas will be especially hard hit. He keeps his insurance current, Mr. Austin said, but sees no need for special precautions.
"I don't pay these things a whole lot of mind," said Mr. Austin, 69, a native of the Outer Banks. "Because they say so doesn't mean it's going to happen that way."
In Galveston, Tex., Keith Patterson, a resident there for 30 years, dismissed the urgency of a hurricane survival kit on Thursday. No use worrying about a hurricane until it is near, he said.
"When one is coming, I'll make preparations," said Mr. Patterson, 68, a retired purchasing clerk. "I'll get what I have to get then."
In Florida, the second annual tax holiday on hurricane supplies, from May 21 through June 1, has not drawn an overwhelming response, several store representatives said. But at least one store, the Lowe's in South Fort Myers, was selling more generators than barbecue grills last week, said John Sandford, operations manager there.
At a Home Depot, Brenda and Jerry Dyche of South Fort Myers were shopping for a generator last Wednesday. With that and a new roof, they said, they had no reason to flee.
"We'd just as soon be in our house," Mr. Dyche said. "Where are we going to go? I-75 is a parking lot by the time they evacuate everybody."
Likewise, Ronda Burke, who did not go inland last year to avoid Hurricane Rita but stayed on South Padre Island, Tex., to watch over her new health food cafe, Naturally's, said she would probably do the same this year if necessary.
"We feel about our store like you feel about a person," said Ms. Burke, whose husband took their two young children to higher ground as Hurricane Rita neared the Texas coast (and eventually came ashore far from South Padre Island). "We'd probably ride it out again."
Meanwhile, government agencies are preparing more thoroughly than ever, stockpiling water and food, improving communication technology and outfitting supply trucks with global positioning systems.
Hattiesburg, Miss., is buying $4 million worth of generators for its public buildings and water system. Broward County, Fla., bought a $500,000 command post vehicle to shuttle emergency managers among crisis spots. Many areas will offer more hurricane shelters this year, though officials like Herminio Lorenzo, the Miami-Dade County fire chief, are portraying them bleakly to encourage people to make their own plans.
"The very last place you would want to go is a Red Cross shelter," Mr. Lorenzo said last week at a community hurricane preparation meeting. "You're so close to the people sleeping next to you that you can feel the hair of their mustache on the side of your head."
Some communities are coaxing the public to prepare in a piecemeal way, like saving old milk jugs as emergency water containers and buying one extra can of food on every grocery trip. Escambia County, Fla., is publishing weekly shopping lists to try to get residents to stock up little by little. Martiza Vazquez of Miami said that approach had made preparing more manageable.
"Every time I go to the supermarket I buy four or five cans of tuna or soup or whatever," Ms. Vazquez, 37, said. "I have a checklist that came with the paper the other day, and I am using that to figure out how much is enough."
Waiting for a taxi to take her to her job at McDonald's, Chanavia Williams of Galveston, who makes $5.75 an hour, laughed at the notion of buying provisions to sock away.
"We got food, but I got none saved," said Ms. Williams, 17, the single parent of a 2-year-old, who lives in public housing.
Ms. Williams said she would have to sacrifice buying diapers and baby clothes to afford a hurricane survival kit.
Still, Ms. Williams, who evacuated on a bus as Hurricane Rita neared, said she wanted to prepare, echoing others who had frightening experiences last year. Wayne P. Sallade, emergency management director in Charlotte County, Fla., which was devastated by Hurricane Charley in 2004, said the Mason-Dixon poll numbers on hurricane preparation were skewed by people in states that had not had hurricanes recently.
"You talk to people in cities here, and there's an absolute fever for information," Mr. Sallade said.
That is also true in New Orleans and along the Mississippi coast, where post-Hurricane Katrina anxiety has compelled many to prepare diligently this year.
But in Houston, Joe Laud, spokesman for the city's emergency center, said only 1,000 people with special needs had registered for public transportation to pick them up in an evacuation. During Hurricane Rita, Mr. Laud said, 25,000 such residents needed help evacuating.
Gov. Jeb Bush of Florida, at his annual hurricane conference this month in Fort Lauderdale, sourly recalled the chaos after Hurricane Wilma last year, where throngs of residents lined up for free emergency supplies that quickly ran out.
"It makes it a lot harder when people line up in their Lexuses or Mercedeses to get ice and water at a public distribution site when the Publix is open a block away,"
Mr. Bush said.
As his audience of emergency workers applauded, he added, "I don't know about you, but it sure made me feel better to get that off my chest."
Reporting for this article was contributed by Terry Aguayo and Andrea Zarate from Miami; Joanna Hogan from South Fort Myers, Fla.; John DeSantis from Wilmington, N.C.; Karen Hastings from South Padre Island, Tex.; and Thayer Evans from Galveston, Tex.