The Finances of Surviving a Hurricane

A hurricane has hit much of the east coast, and people are being warned to prepare for the worst. If you live in the hurricane’s projected path, not only are you likely getting calls from worried parents telling you to stock up on water and non-perishables, but you might also be getting emails from stores trying to lure you in. Natural disasters present a big opportunity to increase spending, and businesses are not shy about using that to their advantage.

What makes natural disasters so difficult to navigate is that it is hard to assign a dollar value to your life or well-being. (Does the small chance that you might need another gallon of water justify its purchase?) Not only is it difficult to decide some value for your well-being, but it is also just uncomfortable. People don’t enjoy imagining the worst, and nobody wants to admit that, at a certain point, they might put money ahead of their well-being.


Consider this experiment from Richard Thaler, a professor at the University of Chicago (and who co-wrote the terrific book Nudge): Imagine that you might have been exposed to a disease that, if you have it, would cause you a quick and painless death within the next week. The probability that you have the disease is 1/1000. How much would you be willing to pay for a vaccine that would reduce your risk of death to zero?

The average amount that Thaler found was $200—an amount that strikes me as somewhat low, but is also in 1980 dollars. But here’s the more shocking finding: When Thaler ran the same experiment, but instead asked patients how much they would need to be compensated by a doctor to willingly expose themselves to the disease (with the same 1/1000 probability of contraction), they demanded an average of $10,000.

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What’s going on here? It seems that how the subject frames the decision makes a tremendous difference. In the instance in which the patient might already have the disease, the vaccine is framed as a potential gain. In the pay-for-exposure condition, however, the subject is healthy and frames the potential exposure as a loss. Consequently, the subject must be compensated at a far higher level for exposure, even though after exposure they would only willingly pay a smaller amount to eliminate their risk.

This model has a few predictions for behavior during hurricanes and other natural disasters. For one, the decision to hurricane-proof one’s house could be influenced by what the individual perceives as their default state. A person whose house is not already hurricane-ready might not be willing to pay a few thousand dollars to protect their house from possible damage.

On the other hand, the same person—who has already hurricane-proofed their house—might not be willing to take down their hurricane-proofing, even for a larger amount of money. They would perceive such an offer as a ‘loss’ of security, and thus demand more money. Accordingly, the market for hurricane-proofing and other services might be inefficient because consumer demand varies somewhat arbitrarily.

This discussion so far has been fairly abstract, but here are a few more concrete tips that you can use to be better prepared for your next natural disaster:

1. Invest in supplies ahead of time.

FEMA has a good list of supplies that you might need in the case of an emergency. The problem with waiting until a disaster is close is two-fold: For one, you might be subject to hiked prices (or decreased supply) in one form or another. Although different consumer protection bureaus have policies that prevent stores from gouging consumers with outrageous prices during emergencies, smaller changes can slip through the cracks. When you are buying mostly non-perishables, it makes sense to buy when you can get the best prices—not when the prices are likely at their worst.

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Second, you might find yourself vulnerable to over-spending or to impulse purchases that you don’t really need. For example, I used the hurricane as an excuse to stock up on some protein bars “in case I need food later.” I ended up snacking on the protein bars throughout the rest of the day, and all of sudden I needed to spend more money on those supplies. Had I kept an emergency kit ready to go, I would not have felt the pressure to buy those initial bars, and I wouldn’t have sunk so much money into them.

This advice is particularly important given how some chains use disasters as marketing tactics. CVS has been emailing me quite aggressively the last few days, warning me to stock up on emergency essentials and to make sure I don’t miss out on certain products. Of course, this advice is sound to some degree—if I need prescriptions, it would make sense to refill them now—but it also contains some items I don’t need. Using these marketing tactics to guide my purchases could cause me to spend unnecessarily, whereas deciding my own needs ahead of time might not.

2. Look for recovery opportunities if the disaster hits hard.

Depending on where you are in life when the hurricane hits (in college; living with roommates in the real world), you might have some good opportunities available for your recovery. For instance, my school is maintaining its emergency staff throughout the hurricane, and if I were to find myself in a jam, they could likely help out with emergency supplies of some kind. Of course, this assistance is funded in part by my tuition, but it’s also free now in the moment. If I really needed something, it’s good to know that there is help available.

A friend of mine also received an email from her bank last night informing her that if the hurricane has caught her off-guard, they are available for emergency cash and other ways to manage the next few days. It’s important to be weary of interest payments or other things in this case (lenders know that people are desperate, and they might be exploitable), but this seemed like a genuine good-faith effort. Not all banks will operate so benevolently, but it probably makes sense to call up your representatives and see how they can offer you assistance during the disaster. Worst case scenario, you decide that they can’t do much for you, and you’re in the same situation you were before.


Natural disasters can cause a lot of damage, and the amount you spend on preparation probably isn’t at the top of that list. But if you’re going to prepare regardless, it makes sense to go about that preparation as soundly as possible. It’s easy for small costs to add up over time, and by approaching your decisions thoroughly and thoughtfully, you can help to save yourself money in the long-run. Stay safe.