Sunday, July 09, 2006

Rationally irrational!!??

I was surprised that at the end of the storms and floods last week, people in Virginia are blaming the government and asking for Federal Disaster Assistance. I agree a lot of people lost their houses and cars etc, but why should the government pay for their loss? Ideally they should have been insured, if they weren't then the individuals took the risk of non insurance. Most of the losses had a very low probability of happening; however, these were regions which were in the flash flood zone and although this was a really big disaster unlike any they would have experienced in the past, home owners must have realised the potential for flood damage. There was even one home owner on TV who said that his basement had flooded last year during the summer storms. So, if individuals know their homes could be flooded, and still did not insure their homes or make alternative arrangements, does that mean they are irrational? To use Prof. Caplan's terms are they rationally irrational? I would say they are plain stupid or simply risk seeking. They do not have a right to demand tax money that you and I pay as disaster relief.

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