Who cares about efficiency?

The title of an article in last week's Economist itself gives cause for concern:

Counties that voted for the president get more in disaster relief

The article is referring to the federal aid that United States dispenses following natural disasters. It's a bit more nuanced than the title suggests. Research found that:

[G]iven two natural disasters that inflict the same amount of damage, presidents have been twice as likely to declare a disaster when one occurs in a swing state like Ohio or Florida, with a roughly equal number of Republican and Democratic voters, as when one happens in a politically uncompetitive place. Economist, 20 October

 Another study quoted in the article says that: 

[I]t takes about $27,000 of relief spending to “buy” just one extra vote for an incumbent party. It would be far more efficient to invest that money in disaster preparation, since each dollar governments spend on preventing harm from nature’s wrath is thought to yield some $15 in savings on future relief costs. Unfortunately, the electorate seems to reward only politicians who open up the public purse after damage is done.

The problem, then, is not solely one of cynical politicians: we citizens are culpable to the degree that we react emotionally in times of crisis, especially when that such crises have impacts that can be filmed. Which is why I advocate targeting outcomes, including the impacts of national or global disasters, ahead of time, so that we can channel our scarce resources into the areas where it will relieve most suffering. Disaster Prevention Bonds could do this. Issuers of these bonds would target for reduction the numbers of people killed, injured or made homeless by natural or manmade disasters. The nature of the disaster need not be specified in advance and the bonds could aim to target for reduction national or global catastrophes.

Disaster Prevention Bonds targeting global disasters could be backed by some or all of the world’s governments and issued by an international body like the United Nations or World Bank. These bonds need not bear interest, and would redeemable for a fixed sum once a sustained period of absence of a humanitarian disaster had passed. The bonds would be floated on the open market and be tradeable at any time thereafter. Because they are tradeable, they would give people incentives to look for solutions to problems that might arise years beyond the planning horizon of today's policymakers. The bonds' redemption terms would stipulate that they would become worthless the moment an unspecified calamity killed, say, 100 000 of the world’s citizens by a single catastrophic event in any 48-hour period. So bondholders would have powerful incentives to anticipate such an event, and minimise the chance of its occurring. Nationally backed Disaster Prevention Bonds would work in similar fashion, on the national scale.

Disaster Prevention Bonds would entail our making decisions about funding before catastrophes arise, when efficiency, in terms of the reduction of suffering per dollar spent, will be our key driver. They would not stop the misallocation of resources once a disaster has occurred, but the second piece of research quoted above would suggest that disaster prevention is currently underfunded. A bond regime would make such funding levels transparent, in ways that ordinary people can comprehend, and it's likely that, as a result, it would work to minimise the suffering inflicted by future disasters.