Comment on Open thread, July 28 - August 3, 2014

Tue, 29 Jul 2014 02:59:26 GMT

Large-scale catastrophe (consult your local relevant government agency, such as , buy insurance for non-global events)

I believe that some foreign large-scale catastrophes could also negatively impact one’s well-being. Extreme example: imagine if everyone in the world suddenly died except the citizens of your country. Psychological toll aside, your country’s necessary transition from international trader to autarky would be painful. Losing trading partners = losing ability to specialize = reducing economic efficiency = falling wages.

The reinsurance markets often deal in the risks of the disastrous. Maybe you can evaluate reinsurance offering documents and prices in order to extract the market’s implied probability of similar events.

Discuss