Quality Assurance by the Public Sector: An Analysis of Building Code Enforcement

Building codes have been stressed as a measure to reduce vulnerability to hurricanes and other natural disasters.  Almost all U.S. states have adopted a building code, but building codes do not enforce themselves.  In this paper, Professor Sutter explores the determinants of building code enforcement across states using ratings from Insurance Services Office.  Overall enforcement is not outstanding, as only five communities have the best rating of 1 and less than 7% have one of the three top ratings.  Although proposed as a means to reduce damage from natural hazards, enforcement is not on average better in states vulnerable to hurricanes and earthquakes; enforcement is actually lower in states vulnerable to earthquakes. Enforcement generally improves with a larger state and local government, while political corruption reduces enforcement for personal insurance lines.  Building codes are better enforced in more urban states, consistent with beneficial competition between local governments, although this result might be an effect of income.  Greater inequality does not affect enforcement.