Should Low-Risk Homeowners Subsidize High-Risk Owners?

One of the fascinating things about the debate over homeowners insurance post-Katrina is how seldom you see folks acknowledge the simple principle that what you pay for, you will get more of.  This article by the regional community development director of the Atlanta Fed’s branch in Miami is a particularly unimpressive example of writing that seems oblivious to this concept, or any precept of human behavior, for that matter, which perhaps may in itself raise troubling questions about whom the Atlanta Fed is hiring these days. 

This article is more a checklist of stuff to mention than it is an analysis, a series of platitudes and premises whose only proof is themselves.  Probably the most irritating thing about it is that it buries the lead — whether a national pool should be created to subsidize high-risk homeowners — and then doesn’t even analyze the effect on pricing or affordability for low-risk homeowners, much less ask whether the game is worth the candle, or whether we want to encourage more high-risk building.

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