Editing Parable of the broken window (section)

===Cost of disasters===
The broken-window scenario is used as an analogy for destruction by natural disasters.<ref>{{cite news|url=https://www.economist.com/democracy-in-america/2011/03/16/japan-and-the-economics-of-natural-disaster|title=Japan and the economics of natural disaster|date=16 March 2011|newspaper=The Economist}}</ref> Disasters disrupt economic activity.<ref>{{cite web|url=https://www.telegraph.co.uk/finance/economics/12071604/UK-flooding-cost-of-damage-to-top-5bn-but-many-homes-and-businesses-underinsured.html|title=UK flooding: cost of damage to top £5bn but many homes and businesses underinsured|first=Rebecca|last=Burn-Callander|date=28 December 2015|via=www.telegraph.co.uk}}</ref> The economic effects of natural disasters are varied.<ref name=boston>{{cite news|url=http://archive.boston.com/bostonglobe/ideas/articles/2008/07/06/how_disasters_help/?page=full|title=How disasters help|first=Drake|last=Bennett|date=6 July 2008|newspaper=The Boston Globe}}</ref>

[[File:Taisho-suji market f164.jpg|thumb|Firefighters at work in the Taisho-suji Market in [[Kobe]], Japan after a [[Great Hanshin earthquake|1995 earthquake]].]]

Countries are more likely to have GDP fall after a disaster if they have more unemployment, more poverty, less effective local and national governments and institutions, and weaker economic and diplomatic connections. Countries are more likely to have a GDP boost and recover quickly from a disaster if they retain a skilled workforce and the ability to mobilize resources for reconstruction, including resources from outside the disaster area.<ref name=coping>{{cite news|url=https://www.reuters.com/article/us-japan-quake-recovery-idUSTRE72C19320110313|title=Special Report: Advanced economies cope better with disasters|newspaper=Reuters |date=13 March 2011|via=www.reuters.com}}</ref><ref>{{cite web|url=http://www.acs-aec.org/index.php?q=disaster-risk-reduction/the-broken-window-fallacy-economics-investment-and-disaster-risk-reduction|title=The Broken Window Fallacy: Economics, Investment and Disaster Risk Reduction|website=ACS-AEC – www.acs-aec.org}}</ref> On the one hand, prompt recovery has been attributed to prompt insurance and aid payments, with the contrast between [[Hurricane Andrew]] and [[Hurricane Katrina]] as an anecdotal example.  On the other hand, slow recovery has been blamed on predatory behaviour, with those unharmed or less-harmed by the disaster taking advantage of those more harmed.<ref name=boston/>

Areas that have had repeated disasters tend to invest more in skills and education (possibly because this is preferred to riskier investment in infrastructure, which might be destroyed again), and they tend to have a higher [[total factor productivity]] (possibly also because infrastructure destroyed in disasters is replaced with better infrastructure, as, for instance, in the [[Great Fire of London]]). These tendencies could in theory lead to longer-term economic benefits (which may cause GDP growth).<ref name=boston/><ref name=Skidmore&Toya>{{Cite journal| doi = 10.1093/ei/40.4.664| issn = 1465-7295| volume = 40| issue = 4| pages = 664–687| last1 = Skidmore| first1 = Mark| last2 = Toya| first2 = Hideki| title = Do natural disasters promote long-term growth?| journal = Economic Inquiry| date = October 2002}}</ref>

There is some evidence that geological disasters do more economic harm than climate-related disasters, in the long term. Geological disasters, such as [[landslides]] and earthquakes, happen with little immediate warning and kill many people. Climate-related disasters, such as hurricanes, are more predictable on a scale of days to hours, and kill fewer people.<ref name=boston/><ref name=Skidmore&Toya /> Such [[Warning system|warning]] saves people, but not immovable property.<ref>{{cite web|url=http://www.scidev.net/index.cfm?originalUrl=/global/earth-science/feature/early-warning-of-disasters-facts-and-figures-1.html&|title=Early warning of disasters: Facts and figures|last=SciDev.Net|website=SciDev.Net}}</ref> This suggests that killing people does long-lasting economic harm, while destroying capital is not as harmful to GDP growth.

<blockquote>
"Destroy any amount of physical capital, but leave behind a critical number of knowledgeable human beings whose brains still house the culture and technology of a dynamic economy, and the physical capital will tend to reemerge almost spontaneously" — George Horwich, Purdue University<ref name=coping/><ref>{{cite journal |last1=Horwich |first1=George |title=Economic Lessons of the Kobe Earthquake|journal=Economic Development and Cultural Change |date=April 2000 |volume=48 |issue=3 |pages=521–542 |doi=10.1086/452609|jstor=10.1086/452609 |s2cid=154588521 |url=https://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=1128&context=ciberwp |url-access=subscription }}</ref>
</blockquote>

Even in disasters with few physical injuries, a large portion of the economic cost may be public health effects (approximately a tenth, in the case of the [[2007 United Kingdom floods|summer 2007 floods in the UK]]). The economic costs of disruption to children's education are significant.<ref>{{Cite web|url=https://www.gov.uk/flood-and-coastal-erosion-risk-management-research-reports/the-costs-of-the-summer-2007-floods-in-england|title=The costs of the summer 2007 floods in England|website=GOV.UK}}</ref> Mental health issues may be triggered or exacerbated by the distress suffered during the disaster.<ref>{{Cite journal| doi = 10.1371/4f9f1fa9c3cae| pmid = 23066515| issn = 2157-3999| last1 = Stanke| first1 = Carla| last2 = Murray| first2 = Virginia| last3 = Amlôt| first3 = Richard| last4 = Nurse| first4 = Jo| last5 = Williams| first5 = Richard| title = The Effects of Flooding on Mental Health: Outcomes and Recommendations from a Review of the Literature| journal = PLOS Currents Disasters| volume = 4| pages = e4f9f1fa9c3cae| access-date = 2018-02-07| date = 2012-05-30| doi-broken-date = 1 November 2024| url = http://currents.plos.org/disasters/article/the-effects-of-flooding-on-mental-health-outcomes-and-recommendations-from-a-review-of-the-literature/| pmc = 3461973| doi-access = free}}</ref> Health advice on minimizing psycho[[social stress]] has been given for disasters. While public health costs may contribute to economic activity and GDP growth, growth in demand for medical or educational assistance is unlikely to be seen as beneficial.