Learning with Rare Disasters

Learning with Rare Disasters
Author: Jessica A. Wachter
Publisher:
Total Pages: 64
Release: 2019
Genre:
ISBN:

Financial crises appear to have long-lasting effects, even after the crisis itself has past. This paper offers a simple explanation through Bayesian learning from rare events. Agents face a latent and time-varying probability of economic disaster. When a disaster occurs, learning results in greater effects on asset prices because agents update their probability of future disasters. Moreover, agents' belief that the disaster risk is high can rationally persist for years, even when it is in fact low. We generalize the model to allow for a noisy signal of the disaster probability. This generalized model explains excess stock market volatility together with negative skewness, effects that previous models in the literature struggle to explain.

Learning, Rare Disasters, and Asset Prices

Learning, Rare Disasters, and Asset Prices
Author: Yang K. Lu
Publisher:
Total Pages: 35
Release: 2016
Genre:
ISBN:

We incorporate joint learning about state and parameter into a consumption-based asset pricing model with rare disasters. Agents are uncertain whether a negative shock signals the onset of a disaster or how much long-term damage a disaster will cause and they update their beliefs over time. The interaction of state and parameter uncertainty increases the total amount of uncertainty and slows learning. Once the two types of uncertainty are both priced in asset prices, their joint effect enables our model to account for the level and volatility of U.S. equity returns without relying on exogenous variation in disaster risk or any realization of disaster shock in the data sample.

Learning, Rare Disasters, and Asset Prices

Learning, Rare Disasters, and Asset Prices
Author: Federal Reserve Federal Reserve Board
Publisher: CreateSpace
Total Pages: 34
Release: 2014-11-15
Genre:
ISBN: 9781503231191

In this study, we examine how learning about disaster risk affects asset pricing in an endowment economy. We extend the literature on rare disasters by allowing for two sources of uncertainty: (1) the lack of historical data results in unknown parameters for the disaster process, and (2) the disaster takes time to unfold and is not directly observable. The model generates time variation in the risk premium through Bayesian updating of agents' beliefs regarding the likelihood and severity of disaster realization. The model accounts for the level and volatility of U.S. equity returns and generates predictability in returns.

Learning from Disasters

Learning from Disasters
Author: Brian Toft
Publisher: Springer
Total Pages: 145
Release: 2016-07-27
Genre: Business & Economics
ISBN: 1349279021

This compelling book offers an important insight into the way organizations implement policies and procedures to prevent future disasters occurring. The third edition includes an introductory chapter which demonstrates on a theoretical and practical level a number of reasons why individuals and groups of people fail to learn from disasters in the first place. Based on thorough research, Learning from Disasters is essential reading for all those involved in risk management, disaster planning and security and safety management.

Disaster by Choice

Disaster by Choice
Author: Ilan Kelman
Publisher: Oxford University Press
Total Pages: 192
Release: 2020-02-27
Genre: Science
ISBN: 0192578286

An earthquake shatters Haiti and a hurricane slices through Texas. We hear that nature runs rampant, seeking to destroy us through these 'natural disasters'. Science recounts a different story, however: disasters are not the consequence of natural causes; they are the consequence of human choices and decisions. we put ourselves in harm's way; we fail to take measures which we know would prevent disasters, no matter what the environment does. This can be both hard to accept, and hard to unravel. A complex of factors shape disasters. They arise from the political processes dictating where and what we build, and from social circumstances which create and perpetuate poverty and discrimination. They develop from the social preference to blame nature for the damage wrought, when in fact events such as earthquakes and storms are entirely commonplace environmental processes We feel the need to fight natural forces, to reclaim what we assume is ours, and to protect ourselves from what we perceive to be wrath from outside our communities. This attitude distracts us from the real causes of disasters: humanity's decisions, as societies and as individuals. It stops us accepting the real solutions to disasters: making better decisions. This book explores stories of some of our worst disasters to show how we can and should act to stop people dying when nature unleashes its energies. The disaster is not the tornado, the volcanic eruption, or climate change, but the deaths and injuries, the loss of irreplaceable property, and the lack and even denial of support to affected people, so that a short-term interruption becomes a long-term recovery nightmare. But we can combat this, as Kelman shows, describing inspiring examples of effective human action that limits damage, such as managing flooding in Toronto and villages in Bangladesh, or wildfire in Colorado. Throughout, his message is clear: there is no such thing as a natural disaster. The disaster lies in our inability to deal with the environment and with ourselves.

Planning for Community-based Disaster Resilience Worldwide

Planning for Community-based Disaster Resilience Worldwide
Author: Adenrele Awotona
Publisher: Taylor & Francis
Total Pages: 493
Release: 2016-10-14
Genre: Science
ISBN: 1317080149

We are witnessing an ever-increasing level and intensity of disasters from Ecuador to Ethiopia and beyond, devastating millions of ordinary lives and causing long-term misery for vulnerable populations. Bringing together 26 case studies from six continents, this volume provides a unique resource that discusses, in considerable depth, the multifaceted matrix of natural and human-made disasters. It examines their bearing on the loss of human and productive capital; the conduct of national policies and the setting of national development priorities; and on the nature of international aid and bilateral assistance strategies and programs of donor countries. In order to ensure the efficacy and appropriateness of their support for disaster survivors, international agencies, humanitarian and disaster relief organizations, scholars, non-governmental organizations, and members of the global emergency management community need to have insight into best practices and lessons learned from various disasters across national and cultural boundaries. The evidence obtained from the numerous case studies in this volume serves to build a worldwide community that is better informed about the cultural and traditional contexts of such disasters and better enabled to prepare for, respond to, and finally rebuild sustainable communities after disasters in different environments. The main themes of the case studies include: • the need for community planning and emergency management to unite in order to achieve the mutual aim of creating a sustainable disaster-resilient community, coupled with the necessity to enact and implement appropriate laws, policies, and development regulations for disaster risk reduction; • the need to develop a clear set of urban planning and urban design principles for improving the built environment’s capacities for disaster risk management through the integration of disaster risk reduction education into the curricula of colleges and universities; • the need to engage the whole community to build inclusive governance structures as prerequisites for addressing climate change vulnerability and fostering resilience and sustainability. Furthermore, the case studies explore the need to link the existence and value of scientific knowledge accumulated in various countries with decision-making in disaster risk management; and the relevance and transferability from one cultural context to another of the lessons learned in building institutional frameworks for whole community partnerships.

Learning and Calamities

Learning and Calamities
Author: Heike Egner
Publisher: Routledge
Total Pages: 334
Release: 2014-08-13
Genre: Social Science
ISBN: 1134475810

It is widely assumed that humanity should be able to learn from calamities (e.g., emergencies, disasters, catastrophes) and that the affected individuals, groups, and enterprises, as well as the concerned (disaster-) management organizations and institutions for prevention and mitigation, will be able to be better prepared or more efficient next time. Furthermore, it is often assumed that the results of these learning processes are preserved as "knowledge" in the collective memory of a society, and that patterns of practices were adopted on this base. Within history, there is more evidence for the opposite: Analyzing past calamities reveals that there is hardly any learning and, if so, that it rarely lasts more than one or two generations. This book explores whether learning in the context of calamities happens at all, and if learning takes place, under which conditions it can be achieved and what would be required to ensure that learned cognitive and practical knowledge will endure on a societal level. The contributions of this book include various fields of scientific research: history, sociology, geography, psychoanalysis, psychiatry, development studies and political studies, as well as disaster research and disaster risk reduction research.

After Great Disasters

After Great Disasters
Author: Laurie A. Johnson
Publisher:
Total Pages: 380
Release: 2017
Genre: Crisis management
ISBN: 9781558443310

Great natural disasters are rare, but their aftermath can change the fortunes of a city or region forever. This book and its companion Policy Focus Report identify lessons from different parts of the world to help communities and government leaders better organize for recovery after future disasters. The authors consider the processes and outcomes of community recovery and reconstruction following major disasters in six countries: China, New Zealand, India, Indonesia, Japan, and the United States. Post-disaster reconstruction offers opportunities to improve construction and design standards, renew infrastructure, create new land use arrangements, reinvent economies, and improve governance. If done well, reconstruction can help break the cycle of disaster-related impacts and losses, and improve the resilience of a city or region.