Abstract
Expectations are a major factor in economic behaviour. If we expect prices to rise, we buy now rather than later, increasing the demand for goods and ensuring that their prices will indeed increase. If we expect share prices to fall, and act on that premise, share prices will fall. Expectations of an economic recovery will stimulate investment and speed the recovery. They are, to a degree, self-fulfilling. This has obvious implications for earthquake prediction. If the prediction is believed, it will have economic consequences. In this paper I suggest that the economic consequences of such a prediction may be as important as the impact of the earthquake itself.
Highlights
In this paper I suggest that the economic consequences of such a prediction may be as important as the impact of the earthquake itself
As an order of magnitude, the temporary disruptions of the Wellington regional economy might cause a 3 percent drop in GNP
The whole regional economy is in recession we 11 before the event
Summary
SUMMARY Expectations are a major factor in economic behaviour. If we expect prices to rise, we buy rather than later, increasing the demand for goods and ensuring that their prices will increase. There is not much agriculture or mining but the commercial sector (because of the number of head offices), transportation (because of the Port of Wellington) and the public services (obviously) are all important in national terms It is a "white collar" concentration - 63% of regional employment was in this category in 1971 as compared to the national average of 48 percent, and the ratio has probably increased since . Neither the Wellington region, nor the rest of New Zealand, has much recent experience of disasters large enough to have a national economic impact - no wars, invasions or occupations, great floods or droughts, or even large earthquakes in the main centres of population. A major earthquake in Wellington would cause damage, distress and a number of deaths The central business district would, presumably, be most affected and this would have national as well as regional consequences. I suggest, would be taken of reputable of destruction might exceed the costs
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