Designing Compensation Programs for Individuals and Households After Man-Made and Natural Disasters in the United States

"Man-made and natural disasters (such as mass shootings, terrorist attacks, flooding, and hurricanes) occur fairly frequently in the United States. Much less frequently, after a disaster occurs, ad hoc victim compensation programs (VCPs) are instituted using public or private funds. The designs of such VCPs--specifying who is eligible for compensation, how much compensation each person receives, procedures for claiming funds and auditing the program, and so on--have differed across programs and often engender considerable controversy. Those responsible for designing these programs must balance competing outcomes and fulfill obligations to various stakeholders, such as victims, taxpayers, and donors. The objective of this report is to help VCP designers make decisions that balance fairness to victims, speed of compensation, and size of transaction costs. It does so by considering design choices in four public VCPs created since 2001 and seven private VCPs created since 2007, highlighting major issues that designers are likely to confront, considering multiple outcomes of design decisions (for example, fairness), and recognizing conflicts or trade-offs in balancing such outcomes. The report offers practical suggestions for how VCP designers can achieve their goals fairly, quickly, and efficiently"--Publisher's description.