Probabilistic Analysis of the Economic Impact of Earthquake Prediction Systems

Document Type


Publication Date

January 2015

Journal Title

Minnesota Journal of Undergraduate Mathematics


In order to study the economic impact of an earthquake prediction system, we use probabilistic methods to model the expected cost per life saved from a prediction system. We improve upon previous work by directly modeling the expected cost per life saved rather than using the ratio of the expected cost to the expected number of lives saved, which we show is always an underestimate. The model is applied numerically to the San Francisco Bay area and the expected cost per life saved from an earthquake prediction system over a 50 year period is found to be $3.3 million. While the amount is quite high, it is substantially lower than the corresponding expected cost per life saved of $6.3 million from expenditures in earthquake engineering to improve building codes. Therefore, we conclude that earthquake prediction systems provide a valuable public good.