Another way to adjust for different eras is by considering the country's
total wealth. The Bureau of Economic Analysis has published estimates
of the total "tangible wealth" in the United States for 1925-1997.
Tangible wealth can be thought of as how much stuff people have.
In addition to inflation, people now have more possessions than they used
to (automobiles, televisions, computers, microwave ovens, etc.) We
can scale damage based on this tangible wealth, yielding a number that
compares the damage to the total wealth of the country. In 1997,
the tangible wealth of the United States was approximately $25,000,000,000.
The table shows the 15 costliest
US tornadoes since 1850 adjusted for tangible wealth in 1997 dollars.
The death toll and raw dollar damage are shown. For tornadoes from
1925-1997, I've simply multiplied the raw damage by the ratio of the 1997
tangible wealth to the appropriate year's value. Outside of that
range, I've extrapolated in the following way. In the "Wealth Adjusted
Damage" column, I've simply assumed that the only change to wealth is from
inflation. This is a very conservative estimate most of the time.
The other three estimates were found by assuming the exponential growth
in wealth can be modelled as the 10th, 25th and 50th percentile values
of the annual growth rates during the period the BEA has published the
values. Generally, these are less conservative values than the simple
inflation adjustment values. The 10th percentile to underestmates
the long-term rate of change of wealth and the 50th percentile overestimates
the long-term rate of change from 1925-1997, each by about 1% at the end
of the period. The 25th percentile matches the 1997 value.
All three values are given to try to put realistic bounds on the adjusted
damage.
All dollar values are given in millions of 1997 dollars. As a comparison, if we take the most likely value of the 1896 Saint Louis damage as $3574 million dollars, that damage represented 0.014% of the total wealth of the United States.
For technical details of the wealth adjustment, see
Katz, A. J., and S. W. Herman, 1997: Improved estimates of fixed reproducible tangible wealth, 1929–95. Survey of Current Business, May 1997, 69-92.
and
Pielke, R. A., Jr., and C. W. Landsea, 1998: Normalized hurricane damages in the United States, 1925-1995. Wea. Forecasting, 13, 621-631.