2 Economic Principles , Issues , and Research Priorities in Hazard Loss Estimation ∗

ion of modeling higher-order losses. For example, a survey might be circulated simply asking firms to estimate their indirect losses from an earthquake, i.e., those not associated with direct physical damage to their facilities or to direct lifeline curtailments. This would seem to obviate the expense of constructing a model, but it has two shortcomings. First, higher-order effects are so extensive and so often many steps removed from direct losses that it would be impossible for respondents to answer this question accurately. The situation is difficult enough for the case of input or