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In article <miha0008-200195015334@dialup-1-10.gw.umn.edu> miha0008@gold.tc.umn.edu (H. Reiju Mihara) writes:

>1. "Altruism"?

>I received a mail from Japan saying, "So far, no stealing nor robbery is
>reported.  On the contrary, people are helping each other.  So many
>altruistic stories have been reported, that is a good side of this bad
>incident."

>Well, what's in the name?---if you want to call it "altruism," I don't have
>any objection.  But, naming aside, I want to know what's happening here.

>I guess what's happening is that in the present situation, in which people
>there are  (maybe) relieved from their everyday work, the opportunity cost
>of giving help to others is very low (provided that they do not attempt
>anything very risky).  You don't have to go to work, which means you have
>time.  What do you do with the plenty of time?  No much fun out there (of
>ordinary sort).  So get some water for yourself?  Go shopping for your
>family?  Well, that means standing in a long line.  Kind of boring, isn't
>it?  So, here comes a real attractive option---helping others.  (One reason
>that helping is attractive is that it has a direct and visible effect,
>unlike many paper works that most office workers are used to.)

But this response, to the extent that your correspondant characterises it 
accurately, is by no means universal.  After Northridge(LA) '94, there was 
certainly a distressing amount of price-gouging, and a bit of looting as well. 
Of course, one might say that the elasticity of demand for water had dropped 
along with the expected opportunity cost of looting, but that's more of a 
gloss than an explanation.


>Remark.  Welfare economists and public economists are trying to design
>mechanisms in which public goods are provided by private contributions.  It
>turns out we don't have a very beautiful solution to this problem yet,
>provided that rationality of individuals are assumed.  Of course, if we
>relax the rationality assumption and introduce altruism, difficulties are
>resolved. 

What is irrational about altruism?  De gustibus non est disputandum, right?  
In any event, relaxing the assumption of selfishness (as opposed to the much 
less dispensible one of rationality) hardly resolves difficulties - what if 
you and I disagree about my welfare?


>2.  Policy implication.

>I heard on TV that the building code in Japan is very strict.  For the
>purpose of argument I suppose that this information is true.  I felt that
>it is likely that regulation of building (building codes) is going to be
>even  stricter.  That's not good news.

Part of the problem, as manifested in LA, was that the assumptions behind the 
building codes were wrong - buildings built to withstand lateral-slip quakes 
don't do very well in thrust quakes.  Kobe apparantly had both types of 
motion.  Another problem is confusing safe buildings with low damage costs.  A 
safe building is one that allows the inhabitants to survive - it holds 
together long enough for them to escape.  This will almost certainly 
compromise its structural integrity.  A more rigid building will suffer less 
damage below a threshhold, but will collapse catastrophically above that 
threshhold.  The public policy issues include the relative importance of the 
two types of damage.  I do not mean to suggest that material damage is 
unimportant, either. There are real costs to building structures to preserve 
life; material costs, insurance costs (ask any underwriter which type s/he'd 
rather insure), etc.  Moreover, in a mild event, the collateral damage and the 
misery of homelessness, etc. may be substantial.  The issue is not 
cut-and-dried, and cannot be resolved without dialogue and good data on the 
likely distribution of event characteristics.

Market forces may frustrate regulations, as well.  In both the Northridge and 
Loma Prieta quakes, a good deal of the human toll was due to buildings that 
had been illeglly modified after contruction.  To be specific: a lot of 
buildings were designed with carports for parking.  This can be done within 
code, providing the internal structure of the overhanging rooms can survive 
the collapse. In Northridge, there was a 30 block square area where all the 
carports collapsed.  The great loss of life came from one block in which the 
carports had been converted to apartments, without structural walls on the 
outside.  Same thing in Fisherman's Wharf, where the parking areas had been 
converted to shops - again, the window walls gave no support.  The regulations 
permitted the construction, but were powerless (given enforcement resources) 
to prevent the conversion.

As for individual choices, locational change is not an option for many people. 
Insurance may not be rational - it depends on subjective information about the 
characteristics of quakes and on the range of customers your insurance company 
has.  Evidently the Kobe event, like Northridge, was "surprising."  The same 
information that makes insurers willing to offer coverage makes people 
unwilling to buy it - the decision is not simply a matter of risk 
diversification.  In any event, following a truly major quake the solvency of 
the insurer cannot be taken for granted.

>b. Of course, resorting to individual freedom is not so fashionable in
>contemporary economics, whose main philosophy is utilitarian.  So I give
>another argument: Making building codes stricter is bad since it leads to
>more people living in unsafe conditions.  (Yes, this is a usual economic
>argument, you know.)  As I said above, people make choices.  Strict
>building codes make old and dangerous houses economically more attractive
>(since old houses are either exempt from the regulation or it is virtually
>impossible to apply new codes to old houses).  What results is more people
>simply choosing to stay in their old houses.  (I suspect that this analysis
>might explain the tragedy of this time, too.)

Ahh, but the quake has taken care of that little problem, hasn't it:-)  
Seriously, I have always been amused by this apparantly perverse aspect of 
public risk-reduction - we seem most motivated to reduce risks from quakes, 
floods, etc. just after one - when we are statistically least likely to 
benefit from our action.