In this microeconomics podcast, I discuss a riddle. People who live in hurricane prone areas know that their power can be knocked out and that this will disrupt their lives. These individuals know that Amazon and Walmart and other for profit firms sell backup power generators such as this one. Why don’t more people buy them and use them when rare disasters take place?
The answer hinges on the price for these self-protection products and the perceived probability of the rare disaster (in July 2024 —- Hurricane Beryl) knocking out the power grid.
The Challenge of Adapting to Rare Disasters