Search

The article presents a utility analysis of post-disaster co-operation among the affected community. Social scientists have argued that, immediately following a disaster, co-operation increases within the community affected. They suggest that economic theory, if correctly interpreted, already implies an increase in post-disaster charity. For example, the utility maximization hypothesis implies that, after a disaster, at least some forms of charity will increase. So, structural changes in individual utility functions are not a necessary condition for explaining the behavior observed.

The article presents a discussion on the economic actions immediately following a limited disaster, that is, a catastrophe affecting only a small region. Most supply and demand problems being faced by an area hit by a natural disaster are generally short-run in nature because of the aid forthcoming from outside regions. Even when the threat of shortages does exist, the concern of residents in the community for the plight of others helps to minimize serious problems during the emergency period. Also, from the economic point of view it is important to note that post-disaster behavior by individuals helps to eliminate a source of demand for some commodities, thereby tending to keep prices lower than they would be if the same conditions of scarcity arose in a more normal impersonal market situation.