Thomas Russell and Dwight Jaffee argue that private markets should be able to insure against catastrophes like Hurricane Katrina or 9/11, but if government must, then it should follow the same actuarially based pricing and reserving rules that would be followed by a competitive private market.

Close to half the California school districts let teachers choose whether to receive their salaries ten monthly payments or in twelve. Fisherine intertemporal maximization implies that they should choose ten payments and earn interest on their savings for their summer. But about half choose...