ABSTRACT
Since the publication of the Arrow-Lind public investment theorem in 1970, the role of the public sector as a mechanism of risk bearing has changed dramatically. The focus of the Arrow-Lind (A/L) Theorem was on public expenditures such as roads, dams or other infrastructure (see Arrow & Lind, 1970). But in the last 40 years, the most memorable events in which federal government spending has spread risk across the taxpaying public have been natural and financial disasters, notably Hurricane Katrina in 2005 and Sandy in 2012 and the financial meltdown of 2008-2009. In these cases, all taxpayers effectively bore collective responsibility for the plight of those buffeted by nature or financial markets (while infrastructure languished).
