Thursday, January 10, 2008

$3 Quadrillion or $100,000?

Brace yourself for a new round of shock headlines about greedy Katrina Victims:
Hurricane Katrina Victim Sues Army Corps of Engineers for $3 Quadrillion...or 53,700 Times More Than Bill Gates is Worth!

Perhaps some Americans feel that Uncle Sam is really a rich relative that they can impose upon for a ridiculously high handout in their time of need, though not even the legendary Scrooge McDuck of Disney fame would have a vault big enough to shell out the amount of cash that some Hurricane Katrina victims feel that they are due by our Federal Government or the U.S. Army Corps of Engineers to be more precise. It has been reported in USA Today, that among the nearly 1/2 million expected claims against the government in the hurricane's aftermath, there is a claim for $3 quadrillion, as well as one for $6 trillion.

It is sad enough that someone thinks that a government, your government I might add, would have the resources to pay a claim that is roughly equal to 250 times the Gross Domestic Product of the U.S. It is even sadder to think that a lawyer would have the audacity to fill out the claim on their behalf.

To get a feel for the magnitude of the number on such a "frivolous lawsuit" lets take a look at some comparison of what $3 quadrillion is roughly equals to.

$3 quadrillion would make instant billionaires out of 3 million Americans.

$3 quadrillion would make instant millionaires out of every American ten times over.

$3 quadrillion would make you 53,700 times richer than Bill Gates (estimated to be worth $56 billion by Forbes Magazine in 2007)

$3 quadrillion is 2 million times the value of the richest football franchise in America, Dallas Cowboys (valued at $1.5 billion dollars)

By Rolando Cruz, published Jan 09, 2008

Rolando Cruz goes to a great of effort to tell us abut the value of $3 quadrillion, but absolutely none telling about the amount of the average victim's claim. Neither does the AP's Michael Kunzelman:
Katrina's Victims Ask for Huge Checks

NEW ORLEANS -- Hurricane Katrina's victims have put a price tag on their suffering and it is staggering _ including one plaintiff seeking the unlikely sum of $3 quadrillion.


Of roughly 489,000 total claims, the U.S. Army Corps of Engineers said it has received 247 for at least $1 billion apiece, including the one for $3 quadrillion.

It's easy to find reports on staggering Katrina claims, but I couldn't find a single report on the value of the average claim. Finding the total amount of the Katrina claims would have made it possible to make an estimate, but I couldn't find that either. Instead of the blatant sensationalism, the AP and USA Today should tell us what the average victim is asking for, once you factor out the greedy, the insane, the greedily insane, and some that seem to be making some kind of political statement. My first thought was that average claim will probably turn out to be entirely reasonable; as Sandy Rosenthal points out:
The filings will force the U.S. Army Corps of Engineers to assess the damage and to come up with a dollar figure.

Also, the inclusion of a few inflated claims does not nullify the validity of the rest of the half-million.

Also, none of the national reporting mentioned a key point that Joe Bruno raised in a Picayune article:
"Government also requires that you put down a figure .¤.¤. although only a judge can determine value." he said. "But here's the deal: Whatever number you put down, you can never get one dollar more than that amount. To be safe and fair, we told folks they'd better put a larger number."

For that reason, Bruno said, the numbers on the claim forms have little to do with what he ultimately expects claimants to recover.

"My best estimate as to the worth of this case .¤.¤. the amount of uncompensated damages .¤.¤. is about $50 billion," he said.

If my math is correct, $50B divided by just under 500,000 is about $100,000.

As Ashley points out in the comments, median claim should be substituted for average claim. For more on this, see also New Orleans Ladder, First Draft and Oyster.


The average/mean would tell you little, in this case, with these huge outliers, the median would give a better understanding of the numbers.
Hey BSJohn, I had the same sentiments in yesterday's issue of the NO News Ladder
I tried to link your post in today's issue but the link kept breaking no matter how I tried to configure it, so no Moldy City on the Ladder. Shame that one, as I really enjoy your tight reportage.

cest levee,
I seem to recall the the City asked for several hundred billion and in many cases, if they win people will have to pay back insurance companies.
Just for the record I'm in for $500,000. It would pay the insurance back and leave me with a decent settlement.
You're right Ashley, I actually meant to clarify that but forgot about it. That's especially embarrassing considering how often I rant about the misleading use of numbers. I also meant to point out that a distinction should be made between business claims and personal claims, since concrete measurable losses for businesses would probably be much higher.

Thanks, for the compliment Bruce. I looked to see if any other NOLA bloggers had posted about it, but somehow missed you. Sorry.

One of this week's articles said that the city filed for $77B, Mominem, but I thought I remembered it being more than that.
I'm pretty sure the $77b was the figure I remember the City representative (can't remember who spoke in that particular case) using when the filing deadline rolled around. I also seem to remember him mentioning the same thing that Bruno mentioned--that any actual settlement figure would certainly be much lower than that, but that once you put down a number you were essentially "capped" at that figure no matter how many "unforeseen" costs might later pop up.
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