The usual, “Hurricane will raise GDP” stories are circulating and some of my free market friends are conceding the point but saying that not all rises in GDP are good.
However, there is a literature on this subject (Cowen’s third law anyone?), and the best paper I know in that literature does not find ANY positive effects of large natural disasters on GDP!
Paper is called Catastrophic Natural Disasters and Economic Growth in RESTAT 2013. Here’s a link to an earlier, ungated version.
The following is from the abstract:
This paper examines the short and long-run average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies. The counterfactual of the cases studied is assessed by constructing synthetic control groups, taking advantage of the fact that the timing of large sudden natural disasters is an exogenous event. It is found that only extremely large disasters have a negative effect on output, both in the short and long run. … It is also found that smaller, but still very large natural disasters, have no discernible effect on output.
So, huge disasters, negative. Only very large? no effect.
Here’s the graph for the 1% of largest disasters:
And here’s for the top 10% of disasters:
NATURAL DISASTERs ARE NOT A BOON TO ECONOMIC GROWTH!!!!!!!!
Tyler nailed it yesterday, pointing out that “fixing” EJMR is not going to solve any of the real problems in academic economics. But I don’t think Tenure Reform is going to do it either. I know many of my friends won’t like this, but we need serious affirmative action at many levels of higher ed to fix the white maleness of academic economics.
I’ve been persuaded by recent papers in development (Melissa Dell on the Mita, lots of Nathan Nunn’s work among others) that the effects of history are very long lasting. And I believe the effects of how African Americans and women were (are?) treated in this country are with us still to this day.
If we are not satisfied with the pace of change as we now see it, we have to do something about it. It’s tough because it is kind of a chicken and egg problem. We need African American and women professors to inspire students and provide role models, but we don’t have them.
So affirmative action in grad school recruiting, in hiring, even in promotion / retention is needed if we are going to even semi-rapidly increase race and gender diversity in economics.
In parallel to this, k-12 education resources need to be better focussed on poor and minority students.
Econ does decently well on intellectual diversity (especially when compared to other social science disciplines), but terrible on race and gender diversity. It won’t change by villain-izing the bros at EJMR, nor by reforming tenure.
And of course not only is it right, but it is good for all of us to have everyone in society contributing to their potential.