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Mises Economics Blog

Quarterly Journal of Austrian Economics 8, no. 2 (Summer 2005)

August 5, 2005 5:15 PM by Mises Institute Publications | Other posts by Mises Institute Publications | Comments (4)

Volume 8, no. 2 (Summer 2005)
  • THE SPATIAL NATURE OF ENTREPRENEURSHIP by David Emanuel Andersson. Kirzner’s theory of entrepreneurship has far-reaching consequences. It explains the coordination of markets and of knowledge. It explains. . . .
  • WILLIAM GRAHAM SUMNER: MONETARY THEORY by H.A. Scott Trask. The pioneering sociologist William Graham Sumner was a prolific and astute historian of the early American republic, whose work was informed by his classical liberalism and his understanding of economics. . . .
SYMPOSIUM: On the Occasion of the Eighteenth Edition of Paul Samuelson's Economics
  • SAMUELSON'S ECONOMICS: THE CONTINUING LEGACY By Aron A. Gotesman, Lall Ramrattan, and Michael Szenberg. Samuelson’s legendary textbook, straightforwardly titled Economics, most famously exemplifies Samuelson the writer. . . .

Comments (4)

  • Pete Canning

  • Hmm, I have subscription to the QJAE, and have only recieved 3 issues and I haven't gotten this one yet.

  • Published: August 10, 2005 1:47 PM

  • Gil Guillory

  • Me neither. Maybe my subscription is lapsed.

  • Published: August 10, 2005 2:18 PM

  • Susan Thomas

  • QJAE 8 #2 just arrived at the warehouse on Friday -- they are busy getting subscriber copies packaged and mailed. If you are concerned about your subscription, please feel free to email me at susan@mises.org.

  • Published: August 10, 2005 3:54 PM

  • Gil Guillory

  • On private email, it was pointed out to me that Block and Barnett characterize the problem with private flood insurance thusly:

    (note 12) "If the potential loss from an event would affect all members of the risk class, the
    event is uninsurable. For example, private flood insurance is unavailable because all members
    of the class—parcels of property in the flood plain—will suffer losses from the same
    event. Therefore, the risk cannot be spread from those members of the class unfortunate
    enough to experience the event and consequent loss to other members of the class who do
    not experience the event, and therefore, do not incur a loss. If, and when, the event occurs,
    all members of the class experience a loss."

    The problem encountered with private flood insurance is not catastrophic loss, it is adverse selection. High risk members of what an insurer perceives as a homogeneous risk class take policies at rates exceeding their representation in the class.

    Now, while it seems to be true that private flood insurance policies are not written, there are some commercial policies with "Difference in Conditions" (or DIC) clauses, which cover perils normally excluded from property policies, such as flood and earthquake.

    All told, it seems to be that either the market will not bear the premia required to write flood insurance, or the FEMA programs crowd out private policies, and maybe a contributing factor is the ubiquity of the utility function approach in insurance pricing theory which predicts market-clearing premia which are too low, in this Austrian economist's opinion.

    Over and out.

  • Published: August 10, 2005 3:58 PM

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