Wednesday, February 2, 2011

Storm Preparation Fatigue

Two weeks ago, I proposed that a series of severe storm forecasts could stimulate the economy by boosting consumer spending. The storm preparation spending, like the Christmas spending a month before, would be large enough to lift the whole economy.

Having seen this come to pass, I can now say that there were two problems with this formulation. First, the production lost during the actual storm and its aftermath may be larger than the boost from the preparatory spending. Most of the workers in my local area today, if they get to work at all, will arrive late and distracted because of the ice on the ground and the roads. In other areas, to the north and west, workers will wait for two or three days for the snow plows to clear all the streets. This loss of production, whenever people wait out adverse weather conditions for hours or days, is a substantial effect.

Second, storm preparation fatigue sets in faster than I had counted on. People who had energetically prepared for two major storms in three weeks didn’t exactly go all-out to prepare for the third storm, and basically shrugged off the fourth one. Diminishing effect is a problem with all forms of stimulus, when attempted on a large scale. As you go along, the effect gets smaller and smaller, eventually becoming too small to care about.