Repopulating New Orleans

How did San Francisco do what a top economist says New
Orleans cannot?

Our latest Nobelist in economics, Thomas Schelling, offered the following advice in the wake of Hurricane Katrina: “There is no market solution to New Orleans. It is essentially a problem of coordinating expectations… .” By that he meant simply that each person’s incentive to move home and rebuild depends on his or her confidence that others will do likewise. “But achieving this coordination in the circumstances of New Orleans seems impossible.”

Dollars and Sense March-April, 2006

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