Economics of maritime disasters : essays on the Titanic and Lusitania

This work seeks to fill some of the gap existing in the economics and behavioural economics literature pertaining to the decision making process of individuals under extreme environmental situations (life and death events). These essays specifically examine the sinking’s of the R.M.S. Titanic, on 14th April of 1912, and the R.M.S. Lusitania, on 7th May 1915, using econometric (multivariate) analysis techniques. The results show that even under extreme life and death conditions, social norms matter and are reflected in the survival probabilities of individuals onboard the Titanic. However, results from the comparative analysis of the Titanic and Lusitania show that social norms take time to organise and be effective. In the presence of such time constraints, the traditional “homo economicus” model of individual behaviour becomes evident as a survival of the fittest competition.

Interaction of natural survival instincts and internalized social norms exploring the Titanic and Lusitania disasters

To understand human behavior, it is important to know under what conditions people deviate from selfish rationality. This study explores the interaction of natural survival instincts and internalized social norms using data on the sinking of the Titanic and the Lusitania. We show that time pressure appears to be crucial when explaining behavior under extreme conditions of life and death. Even though the two vessels and the composition of their passengers were quite similar, the behavior of the individuals on board was dramatically different. On the Lusitania, selfish behavior dominated (which corresponds to the classical homo oeconomicus); on the Titanic, social norms and social status (class) dominated, which contradicts standard economics. This difference could be attributed to the fact that the Lusitania sank in 18 minutes, creating a situation in which the short-run flight impulse dominates behavior. On the slowly sinking Titanic (2 hours, 40 minutes), there was time for socially determined behavioral patterns to re-emerge. To our knowledge, this is the first time that these shipping disasters have been analyzed in a comparative manner with advanced statistical (econometric) techniques using individual data of the passengers and crew. Knowing human behavior under extreme conditions allows us to gain insights about how varied human behavior can be depending on differing external conditions.