Why are natural disasters so deadly in some places but not in others? Research into this question is converging on a set of influential variables (e.g., Kahn 2005; Escaleras, Anbarci and Register 2007; Keefer, Neumayer and Plumper 2011), and a repeated finding is that institutions matter (Kahn 2005; Escaleras, Anbarci and Register 2007; Boettke, Chamlee- Wright, Gordon, Ikeda, Leeson and Sobel 2007). Formal institutional arrangements that are more representative in nature have greater incentives to provide public goods that can include mitigation policies. Higher quality institutions, for example, those less suscepti- ble to corruption, are more likely to foster both mitigation and recovery. Simply put, institutions structure incentives, and individuals respond to incentives.
Despite these advances, there has been relatively little work on which types of institutions matter. Most previous research focuses on political institutions, but there are a wide variety of formal and informal economic institutions that structure many of the processes of exchange important to many of the phases of emergency management. One example is contracts. In a market economy, the existence of formal agreements that are enforced by third parties can reduce transaction costs associated with the exchange of property rights, particularly in situations where the exchange is non-simultaneous. Indeed, many of the processes involved in effective emergency management—insurance, assistance compacts, etc.—depend explicitly or at least implicitly on the existence of contract-related institutions. And yet, the strength of country-level contract intensity varies over time and space. What are the effects of these differences on disasters? Do countries with higher levels of contract intensity have better disaster outcomes?
This paper connects existing theories of contracts to theories of disaster and generates competing hypotheses about the relationship between contracts and disaster fatalities. The key explanatory variable of contract intensity is measured using a measure developed by Mousseau (2013), and the data analyzed is national-level, panel data between 1960 and 2007. The analysis provides preliminary evidence for the idea that greater reliance on contracts lowers deaths from natural disasters.