Weathering Corruption

Abstract

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 effect of disaster relief provided by the Federal Emergency Management Agency (FEMA) on public corruption. The results support our hypothesis. Each additional $100 per capita in FEMA relief increases the average state's corruption by nearly 102 percent. Our findings suggest 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, which makes them more corrupt. (c) 2008 by The University of Chicago. All rights reserved..

Weathering the Storm: A Social Marketing Perspective on Disaster Preparedness and Response with Lessons from Hurricane Katrina

“…Further analysis reveals that though Louisiana has a colorful history of corruption, so, too, do other states with a high occurrence of natural disasters. Leeson and Sobel (2006) show that Louisiana, Mississippi, and Florida are the most politically corrupt states and are also the states hardest hit by natural disasters. Corruption notwithstanding, citizens of the United States, and specifically the residents of New Orleans, were failed by the very systems designed to assist them-systems funded using their tax dollars.…”

Impact of natural disaster on public sector corruption

“…Public sector corruption is one of the major issues of concern when considering the interaction between politics and economics 3 (e.g., Glaeser & Saks 2006;Gokcekus 2008;Apergis et al 2010;Dreher & Schneider 2010;Escaleras et al 2010;Johnson et al 2011;Swaleheen 2011). Natural disasters possibly generate an incentive to practice corruption, which is generally defined as the use of public office for private gain (Boettke et al 2007;Leeson & Sobel 2008).…”

“…For instance, public employees were accused of soliciting bribes from relief-funded contractors and of overbilling the government (Leeson & Sobel 2008). Similarly, the misuse of reconstruction funds was revealed in the case of the Great East Japan Earthquake, when it was reported that "a special account budget to fund the reconstruction of communities devastated by the 3/11 earthquake, tsunami, and nuclear disasters has been used to pay for unrelated projects" (Japan Times 2012).…”

“…The seminal work of Leeson & Sobel (2008), based on the Panel data of the United States 4 , provided evidence that disaster relief windfalls increased corruption. They argued that the "disadvantageous location in the Gulf Coast where hurricanes and other bad weather are commonplace may be a large part for the reason why they have historically been more corrupt than states in the Great Plains" (Leeson & Sobel 2008, 678).…”

“…According to Skidmore and Toya, disasters should be divided into either climatic or geologic disasters because their characteristics are different. The argument of Leeson and Sobel (2008) is based on the assumption that disasters occur frequently within limited areas.…”