Thursday, August 30, 2007

Weathering Corruption

Peter T. Leeson, George Mason University
Russell S. Sobel, West Virginia University
July 31, 2007


Could bad weather be responsible for U.S. corruption?

Natural disasters create resource windfalls in the states they strike by triggering federally-provided natural disaster relief. By increasing the benefit of fraudulent appropriation and creating new opportunities for such theft, disaster relief windfalls may also increase corruption.

We investigate this hypothesis by exploring the e¤ect of FEMA-provided disaster relief on public corruption. The results support our hypothesis.

Each additional $100 per capita in FEMA relief increases the average state’s corruption nearly 102 percent. Our fndings suggest that notoriously corrupt regions of the United States, such as the Gulf Coast, are in part notoriously corrupt because natural disasters frequently strike them. They attract more disaster relief making them more corrupt.

The paper is in the form of a 23 page PDF