> Why aren't people pricing in an earthquake discount?
Similarly why we continue to build in floodplains, it's usually fine and when it's not the Federal government steps in and makes sure people are bailed out. This has proven to be a good strategy as long as you're not in Puerto Rico. It's the same idea as the "Greenspan put" being priced into the financial markets.
> when it's not the Federal government steps in and makes sure people are bailed out.
This may be a conservative talking point but it seems more likely that such disasters happen on timescales humans aren't built to reason about. Even if there were no bailouts I doubt things would be any different. These areas have desirable attributes that make them attractive regardless of the risk. There are also precious few areas not subject to any risk at all (a large portion of the continental USA is subject to hurricanes, tornadoes, earthquakes, blizzards, or other potential disasters).
Similarly why we continue to build in floodplains, it's usually fine and when it's not the Federal government steps in and makes sure people are bailed out. This has proven to be a good strategy as long as you're not in Puerto Rico. It's the same idea as the "Greenspan put" being priced into the financial markets.