Disaster Compensation Fund Claims as a Test of Corruption Activity in the U.S

Similar to his job after the 9/11/2001 attacks, Kenneth Feinberg has been called in to be King Solomon again. He will divide up the $20 Billion BP dollars among the "victims". But, how large will the denominator be? Will 8 guys file a claim or 8 billion guys? In both of these case studies, it would interest me --- how many "deserving people" did not file and how many folks who had no genuine claim to the damage fund file a claim seeking dough? This second group represent the corrupt set. Social scientists should be able to use these natural experiments to do some new research on "who engages in corruption". Such statistical profiling might be useful in the future for identifying demographic groups that are more likely to submit a false claim. The rational regulator should give those claims a second look.

UPDATE: I see that my post anticipated the next day's New York Times piece. This article has a funny discussion of "general equilibrium" effects. Consider a Oklahoma Steakhouse that has a famous maincourse of steak and shrimp. If it can no longer buy Gulf Shrimp (because of the Spill), is it a victim who can seek damages?

An economist would ask; "in terms of shrimp price and shrimp quality, what can you substitute to if you can't buy the Gulf Shrimp?" On the consumer side, will your customers stop coming to your restaurant or will they substitute and buy your tofu salad rather than the steak and shrimp? In this second case, then your loss is the change in your profit as consumers make different choices.

So, Ken F. would want to know --- how much aggregate consumer surplus were Gulf Shrimp eaters gaining? This is one measure of part of the damage that the BP Spill created. We would also want to add in the "producer surplus". For a lawyer such as Ken, this could be a difficult calculation and some may try to play him for big bucks claiming that their lossses are huge.